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

Zacks Equity Research
·3 min read

In the latest trading session, Lululemon (LULU) closed at $333.81, marking a +0.67% move from the previous day. The stock outpaced the S&P 500's daily loss of 0.3%. Meanwhile, the Dow lost 0.8%, and the Nasdaq, a tech-heavy index, added 0.64%.

Prior to today's trading, shares of the athletic apparel maker had gained 4.04% over the past month. This has outpaced the Consumer Discretionary sector's gain of 0.66% and the S&P 500's gain of 3.25% in that time.

Investors will be hoping for strength from LULU as it approaches its next earnings release. On that day, LULU is projected to report earnings of $0.84 per share, which would represent a year-over-year decline of 12.5%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1.01 billion, up 9.8% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $4.25 per share and revenue of $4.22 billion, which would represent changes of -13.79% and +6.03%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for LULU. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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 3.78% lower. LULU currently has a Zacks Rank of #3 (Hold).

Investors should also note LULU's current valuation metrics, including its Forward P/E ratio of 78.07. This valuation marks a premium compared to its industry's average Forward P/E of 46.47.

We can also see that LULU currently has a PEG ratio of 3.9. 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. The Textile - Apparel was holding an average PEG ratio of 6.21 at yesterday's closing price.

The Textile - Apparel industry is part of the Consumer Discretionary sector. This industry currently has a Zacks Industry Rank of 22, which puts it in the top 9% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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.

You can find more information on all of these metrics, and much more, on Zacks.com.

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