Lululemon (LULU) Exceeds Market Returns: Some Facts to Consider

Lululemon (LULU) closed at $278.25 in the latest trading session, marking a +1.71% move from the previous day. The stock outperformed the S&P 500, which registered a gain of 0.61% on the day. Elsewhere, the Dow gained 0.97%, while the tech-heavy Nasdaq rose 0.33%.

Prior to today’s trading, shares of the sportswear maker had gained 5.17% over the past month. This outpaced the Consumer Discretionary sector’s gain of 2.91% and lagged the S&P 500’s gain of 5.36% in that time.

The investment community will be paying close attention to Lululemon’s earnings performance in its next release. In this report, analysts expect Lululemon to post earnings of $2.73 per share. This would mark year-over-year growth of 7.91%. Meanwhile, the latest consensus estimate predicts revenue to be $2.35 billion, indicating a 6.76% increase compared to the same quarter last year.

For the full-year period, Zacks Consensus Estimates anticipate earnings of $14.02 per share and revenue of $10.5 billion, meaning changes of +9.79% and +9.17%, respectively, in compared to last year.

Investors should also take note of any recent adjustments to analyst estimates for Lululemon. These revisions typically reflect the latest short-term business trends, which can change frequently. Therefore, positive changes in estimates mean analysts’ optimism regarding the company’s business and profitability.

Our research demonstrates that these estimate adjustments are directly associated with imminent stock price performance. To capitalize on this, we created the Zacks Rank, a proprietary model that incorporates these estimate changes and provides an actionable ranking 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-ranked stocks generating an average annual return of +25% since 1988 Over the past 30 days, our consensus earnings per share forecast has fallen 0.09%. Lululemon is currently sporting a Zacks Rank of #3 (Hold).

From a valuation standpoint, Lululemon is currently changing hands with a forward P/E ratio of 19.52. Its industry sports an average forward P/E of 19.65, so one can conclude that Lululemon is trading at a discount comparatively.

Additionally, we should mention that LULU has a PEG ratio of 1.99. The PEG ratio is similar to the commonly used P/E ratio, but this measure also incorporates the company’s forecast earnings growth rate. At the close of trading yesterday, the Textile – Apparel industry maintained an average PEG ratio of 2.05.

The Textile – Apparel industry is part of the Consumer Discretionary sector. This industry, currently with a Zacks Industry Rank of 153, is in the bottom 40% of all 250+ industries.

The Zacks Industry Rank assesses 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% of industries outperform the bottom half by a factor of 2 to 1.

Remember to trust Zacks.com to watch all of these stock-impacting metrics and more in the coming trading sessions.

Want the latest recommendations from Zacks Investment Research? Today, you can download the 7 best stocks for the next 30 days. Click to get this free report

Lululemon Athletica Inc. (LULU): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research