One of the standouts of today's afternoon trading session has been lululemon athletica inc., which logged a -3.1% drop and underperformed the S&P 500 by -3.0%. The Apparel Manufacturing stock is now trading at $160.65 per share and is -19.36% below its average target price of $199.2. Analysts have set target prices ranging from $100.0 to 303.0 dollars per share, and have given the stock an average rating of hold.
lululemon athletica inc.'s short interest can give us an idea of what future price movements the market expects from the stock. The short interest is the percentage of shares that are tied up in short positions, which will provide gains to the investor only if the stock price falls. The stock's short interest is 7.6% which seems to indicate a mixed sentiment on LULULEMON ATHLETICA INC.
When a stock is sold short, it means an investor has borrowed shares of the stock from their broker, and then sold them at the going market price. The investor hopes for the price to decline, so that they might buy those shares back at a lower price in the future. Once they do, they can return the borrowed shares to their broker, and keep the profit they made on the transaction.
One way to get an idea of the market sentiment on a stock is to check its rate of institutional ownership. In the case of lululemon athletica inc., institutional investors own 88.5% of the shares, which indicates they have a very high stake in the company. What does this really tell us?
Institutional investors such as hedge funds, investment firms, and wealth managers devote significant resources to identifying good investments. If they have decided to invest in LULU, it probably means they believe it is a solid investment choice.
But it could also mean they are buying up shares in an effort to acquire the company or to get seats on the board of directors. Also bear in mind that institutions are fallible (just maybe not quite as fallible as the average retail investor), so they may simply be wrong when they think they've found a good stock.
To sum up, lululemon athletica inc. is probably the subject of positive market sentiment because of an analyst consensus of some upside potential, a hold rating, an average amount of shares sold short, and a significant number of institutional investors. At Market Inference, we believe that any investment decision should be preceded by an in-depth analysis of the company's fundamental values and a comparison with similar stocks.
Here's a snapshot of some important facts to keep in mind about LULU:
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The stock has trailing 12 month earnings per share (EPS) of $14.65
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lululemon athletica inc. has a trailing 12 month Price to Earnings (P/E) ratio of 11.0 compared to the S&P 500 average of 29.3
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The company has a Price to Book (P/B) ratio of 4.36 in contrast to the S&P 500's average ratio of 4.74
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lululemon athletica inc. is a Consumer Discretionary company, and the sector average P/E and P/B ratios are 20.93 and 2.93 respectively
