A strong performer from today's evening trading session is lululemon athletica inc., whose shares rose 2.7% to $502.74 per share. For those of you thinking about investing in the stock, here is a brief value analysis of the stock using the company's basic fundamental ratios.
lululemon athletica inc. Has Elevated P/B and P/E Ratios:
Lululemon Athletica Inc., together with its subsidiaries, designs, distributes, and retails athletic apparel, footwear, and accessories under the lululemon brand for women and men. The company belongs to the Consumer Discretionary sector, which has an average price to earnings (P/E) ratio of 22.96 and an average price to book (P/B) ratio of 4.24. In contrast, lululemon athletica inc. has a trailing 12 month P/E ratio of 63.8 and a P/B ratio of 18.0.
lululemon athletica inc.'s PEG ratio is 2.07, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
Growing Revenues With Increasing Reinvestment in the Business:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $2,649 | $3,288 | $3,979 | $4,402 | $6,257 | $8,111 |
| Revenue Growth | n/a | 24.13% | 21.01% | 10.62% | 42.14% | 29.63% |
| Operating Margins | 17% | 22% | 23% | 19% | 21% | 16% |
| Net Margins | 10% | 15% | 16% | 13% | 16% | 11% |
| Net Income (MM) | $259 | $484 | $646 | $589 | $975 | $855 |
| Net Interest Expense (MM) | $4 | $9 | $8 | -$1 | $1 | $4 |
| Depreciation & Amort. (MM) | $108 | $122 | $162 | $185 | $224 | $292 |
| Earnings Per Share | $1.9 | $3.61 | $4.93 | $4.5 | $7.49 | $6.68 |
| EPS Growth | n/a | 90.0% | 36.57% | -8.72% | 66.44% | -10.81% |
| Diluted Shares (MM) | 136 | 134 | 131 | 131 | 130 | 128 |
| Free Cash Flow (MM) | $331 | $517 | $386 | $574 | $995 | $328 |
| Capital Expenditures (MM) | $158 | $226 | $283 | $229 | $395 | $639 |
| Current Ratio | 3.07 | 2.53 | 2.19 | 2.07 | 1.99 | 2.4 |
lululemon athletica inc. benefits from growing revenues and increasing reinvestment in the business, exceptional EPS growth, and low leverage. The company's financial statements show decent operating margins with a stable trend and irregular cash flows.
