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Lululemon Athletica: Next Stop Is the Moon

Lululemon Athletica (NASDAQ:LULU) has never seen its stock price this high. After continually beating earnings expectations quarter after quarter, and further raising its earnings estimates, the athletic apparel retailer has achieved yet another all-time peak stock price.

In its recent quarter, the $27 billion company reported 17% comparable sales growth and strong 35% earnings-per-share growth.


Lululemon is also trading at an amazing 47 times earnings. The company's stock has traded at an average multiple of only 35 times earnings in its recent past. Any missed expectations in the future make the retailer susceptible to a steep downfall.

The company has otherwise not experienced any marked dropped in stock price in a day or week in its recent history. Along with the broader market indices, it took about four months for Lululemon to shed nearly a third of its value late last year before it started to recover and ride the rising tide as it consistently beat market expectations.

Meanwhile, rough estimations imply a near 26% drop from today's share price should the company's stock trade back to its historic multiple.

Nonetheless, Lululemon remains upbeat with its "Power of Three" growth pillars: product innovation, omni-guest experience and market expansion. Already up 67% this year, Lululemon stock could double before the year ends, at this rate.

Disclosure: The author does not own shares of Lululemon.

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This article first appeared on GuruFocus.