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Lululemon (LULU) Gains As Market Dips: What You Should Know

Zacks Equity Research

Lululemon (LULU) closed at $190.38 in the latest trading session, marking a +0.11% move from the prior day. This change outpaced the S&P 500's 0.65% loss on the day. At the same time, the Dow lost 0.42%, and the tech-heavy Nasdaq lost 0.46%.

Coming into today, shares of the athletic apparel maker had gained 1.14% in the past month. In that same time, the Consumer Discretionary sector gained 4.4%, while the S&P 500 gained 4.11%.

Wall Street will be looking for positivity from LULU as it approaches its next earnings report date. In that report, analysts expect LULU to post earnings of $0.88 per share. This would mark year-over-year growth of 23.94%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $840.55 million, up 16.18% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $4.70 per share and revenue of $3.79 billion. These totals would mark changes of +22.4% and +15.37%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for LULU. Recent revisions tend to reflect the latest near-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.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. LULU is holding a Zacks Rank of #2 (Buy) right now.

Digging into valuation, LULU currently has a Forward P/E ratio of 40.49. This valuation marks a premium compared to its industry's average Forward P/E of 15.2.

Investors should also note that LULU has a PEG ratio of 2.2 right now. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. LULU's industry had an average PEG ratio of 1.44 as of yesterday's close.

The Textile - Apparel industry is part of the Consumer Discretionary sector. This group has a Zacks Industry Rank of 189, putting it in the bottom 27% 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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