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Lululemon (LULU) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

Lululemon (LULU) closed at $312.30 in the latest trading session, marking a +1.17% move from the prior day. This change outpaced the S&P 500's 0.82% gain on the day. Meanwhile, the Dow gained 1.05%, and the Nasdaq, a tech-heavy index, added 0.59%.

Wall Street will be looking for positivity from LULU as it approaches its next earnings report date. This is expected to be June 11, 2020. On that day, LULU is projected to report earnings of $0.27 per share, which would represent a year-over-year decline of 63.51%. Our most recent consensus estimate is calling for quarterly revenue of $715.04 million, down 8.6% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $4.63 per share and revenue of $4.21 billion. These totals would mark changes of -6.09% and +5.85%, respectively, from last year.

Any recent changes to analyst estimates for LULU should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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 has moved 0.45% higher. LULU is currently sporting a Zacks Rank of #3 (Hold).

Digging into valuation, LULU currently has a Forward P/E ratio of 66.67. This valuation marks a premium compared to its industry's average Forward P/E of 23.05.

Investors should also note that LULU has a PEG ratio of 4.03 right now. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. Textile - Apparel stocks are, on average, holding a PEG ratio of 3.34 based on yesterday's closing prices.

The Textile - Apparel industry is part of the Consumer Discretionary sector. This industry currently has a Zacks Industry Rank of 184, which puts it in the bottom 28% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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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