Key Insights Into Lululemon Athletica Stock

Lululemon Athletica logged a 4.8% change during today's evening session, and is now trading at a price of $323.03 per share.

Lululemon Athletica returned losses of -13.2% last year, with its stock price reaching a high of $516.39 and a low of $293.03. Over the same period, the stock underperformed the S&P 500 index by -37.8%. AThe company's 50-day average price was $344.93. Lululemon Athletica Inc., together with its subsidiaries, designs, distributes, and retails athletic apparel, footwear, and accessories under the lululemon brand for women and men. Based in Vancouver, Canada, the Large-Cap Consumer Discretionary company has 38,000 full time employees. Lululemon Athletica has not offered a dividend during the last year.

Wider Gross Margins Than the Industry Average of 51.25%:

2018 2019 2020 2021 2022 2023
Revenue (M) $3,288 $3,979 $4,402 $6,257 $8,111 $9,619
Gross Margins 55% 56% 56% 57% 55% 57%
Net Margins 15% 16% 13% 16% 11% 16%
Net Income (M) $484 $646 $589 $975 $855 $1,550
Net Interest Expense (M) $9 $8 -$1 $1 $4 $43
Depreciation & Amort. (M) $122 $162 $185 $224 $292 $379
Diluted Shares (M) 131 131 130 128 127 127
Earnings Per Share $3.7 $4.93 $4.52 $7.63 $6.74 $12.2
EPS Growth n/a 33.24% -8.32% 68.81% -11.66% 81.01%
Avg. Price $114.7 $180.36 $290.77 $372.05 $321.38 $323.03
P/E Ratio 29.26 34.68 61.73 46.8 45.91 25.2
Free Cash Flow (M) $517 $386 $574 $995 $328 $1,644
CAPEX (M) $226 $283 $229 $395 $639 $652
Current Ratio 2.53 2.19 2.07 1.99 2.32 2.49

Lululemon Athletica benefits from rapidly growing revenues and increasing reinvestment in the business, exceptional EPS growth, and generally positive cash flows. The company's financial statements show an excellent current ratio of 2.49 and wider gross margins than its peer group.

Forward Earnings Show Improvement but Priced Beyond Its Margin of Safety:

Lululemon Athletica has a trailing twelve month P/E ratio of 27.7, compared to an average of 22.06 for the Consumer Discretionary sector. Based on its EPS guidance of $15.71, the company has a forward P/E ratio of 22.0. According to the 22.9% compound average growth rate of Lululemon Athletica's historical and projected earnings per share, the company's PEG ratio is 1.21. Taking the weighted average of the company's EPS CAGR and the broader market's 5-year projected EPS growth rate, we obtain a normalized growth rate of 14.7%. On this basis, the company's PEG ratio is 1.89. This suggests that these shares are overvalued. Furthermore, Lululemon Athletica is likely overvalued compared to the book value of its equity, since its P/B ratio of 9.63 is higher than the sector average of 3.18. The company's shares are currently trading 237.8% below their Graham number. Ultimately, Lululemon Athletica's strong cash flows, decent earnings multiple, and healthy debt levels factor towards it being fairly valued, its elevated P/B ratio notwithstanding.

There's an Analyst Consensus of Strong Upside Potential for Lululemon Athletica:

The 30 analysts following Lululemon Athletica have set target prices ranging from $240.0 to $550.0 per share, for an average of $418.49 with a buy rating. The company is trading -22.8% away from its average target price, indicating that there is an analyst consensus of strong upside potential.

Lululemon Athletica has an average amount of shares sold short because 3.9% of the company's shares are sold short. Institutions own 91.5% of the company's shares, and the insider ownership rate stands at 4.5%, suggesting a large amount of insider shareholders. The largest shareholder is FMR, LLC, whose 15% stake in the company is worth $5,866,257,403.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.