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Lululemon (LULU) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research

In the latest trading session, Lululemon (LULU) closed at $375.67, marking a -0.48% move from the previous day. This change lagged the S&P 500's daily loss of 0.22%. Elsewhere, the Dow lost 0.78%, while the tech-heavy Nasdaq added 0.68%.

Coming into today, shares of the athletic apparel maker had gained 16.63% in the past month. In that same time, the Consumer Discretionary sector gained 10.06%, while the S&P 500 gained 9.15%.

LULU will be looking to display strength as it nears its next earnings release, which is expected to be September 8, 2020. In that report, analysts expect LULU to post earnings of $0.51 per share. This would mark a year-over-year decline of 46.88%. Our most recent consensus estimate is calling for quarterly revenue of $833.81 million, down 5.61% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $4.23 per share and revenue of $4.06 billion. These totals would mark changes of -14.2% and +1.9%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for LULU. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.82% higher. LULU is holding a Zacks Rank of #3 (Hold) right now.

Investors should also note LULU's current valuation metrics, including its Forward P/E ratio of 89.19. This represents a premium compared to its industry's average Forward P/E of 36.63.

Also, we should mention that LULU has a PEG ratio of 4.86. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. LULU's industry had an average PEG ratio of 5.07 as of yesterday's close.

The Textile - Apparel industry is part of the Consumer Discretionary sector. This industry currently has a Zacks Industry Rank of 208, which puts it in the bottom 19% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.

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