Buy Lululemon Stock
A key part of the investing thesis for Lululemon stock relies on the chain's industry-thumping profit margins. Gross profit is far above many peers, including Nike (NKE 2.12%), and has been steadily rising since before the pandemic struck. A change in that trend would threaten shareholder returns by erasing some of the premium valuation that Wall Street has assigned to the stock.
buy lululemon stock
That doesn't change the broader bullish thesis for the stock, though. Lululemon is still finding lots of excitement for its new product releases, which are increasingly heading into new geographies, new markets, and new categories like outerwear and footwear. Its sales growth and operating profit margin metrics are far above what investors can find with most of its industry peers.
Lululemon wouldn't be immune to a recession or a sharp pullback in consumer spending, should one develop over the next few quarters. But its latest operating update doesn't describe such a slump. On the contrary, the company has a good shot at targeting another year of rising sales and improving profits over the long term. Those positive factors keep the stock firmly in the "buy" category.
This chart is not advice or a guarantee of success. Rather, it gauges the real-time recommendations of three popular technical indicators: moving averages, oscillators and pivots. Finder is not responsible for how your stock performs.
Valuing Lululemon Athletica stock is incredibly difficult, and any metric has to be viewed as part of a bigger picture of Lululemon Athletica's overall performance. However, analysts commonly use some key metrics to help gauge the value of a stock.
Lululemon Athletica Inc. , together with its subsidiaries, designs, distributes, and retails athletic apparel, footwear, and accessories under the lululemon brand for women and men. It operates through two segments, Company-Operated Stores and Direct to Consumer. The company offers pants, shorts, tops, and jackets for healthy lifestyle, such as yoga, running, training, and other activities. It also provides fitness- inspired accessories and footwear. The company sells its products through a chain of company-operated stores; outlets; interactive workout platform; a network of distribution channels, such as including yoga and fitness studios, university campus retailers, and other partners; license and supply arrangements; and temporary locations, as well as through mobile apps and lululemon. com e-commerce website.
Yet, Lululemon's stock has still declined more than 20% this year as inflation, rising interest rates, and other macro headwinds drove the major indexes into a grueling bear market. But does Lululemon's pullback represent a good opportunity to buy some shares of its high-flying stock -- which has still rallied more than 400% over the past five years?
Lululemon isn't a screaming bargain yet, but it's one of the few apparel stocks I'd recommend buying right now. It has plenty of pricing power, it's growing much faster than most of its industry peers, and it easily achieved its previous five-year growth targets ahead of schedule even as the pandemic brought other retailers to their knees. Its growth could gradually cool off over the next five years, but I believe it's still a promising long-term investment.
Additionally, Lululemon has tremendous growth potential. From fiscal 2016 through fiscal 2021, revenue and net income soared 167% and 245%, respectively, so it's no wonder the stock skyrocketed as well.
Lastly, while Lululemon has obviously been a great growth stock to own, the business is also incredibly profitable. The company's operating margin, at 21.5% in the latest quarter, exemplifies this. And this means lots of free cash flow that could be returned to shareholders. In fiscal 2014, Lululemon started repurchasing its stock, resulting in a reduced outstanding share count.
Finding great companies to look at is only part of the challenge for investors. The other issue is making sure the valuation is right before deciding to buy. As of this writing, Lululemon's stock trades for a price-to-earnings (P/E) ratio of 39, which at first glance looks on the expensive side of things. However, it is cheaper than the trailing five-year and 10-year P/E averages for the company.
Nonetheless, this multiple is still more expensive than the P/E of 26 that rival Nike's stock sells for. Compared to Nike, though, Lululemon has much better growth prospects and improved profitability (as measured by margins). It might be a smart decision for investors to add a small allocation to Lululemon right now.
Stash Banking services provided by Stride Bank, N.A., Member FDIC. The Stash Stock-Back Debit Mastercard is issued by Stride Bank pursuant to license from Mastercard International. Mastercard and the circles design are registered trademarks of Mastercard International Incorporated. Any earned stock rewards will be held in your Stash Invest account. Investment products and services provided by Stash Investments LLC, not Stride Bank, and are Not FDIC Insured, Not Bank Guaranteed, and May Lose Value. In order for a user to be eligible for a Stash banking account, they must also have opened a taxable brokerage account on Stash.
However, despite Lululemon's continuing solid performance since recovering from the pandemic, investors were disappointed with 2022 fourth-quarter guidance and sent Lululemon stock down 18% since the third-quarter earnings report.
10 stocks we like better than Lululemon AthleticaWhen our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now... and Lululemon Athletica wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Lululemon Athletica and Nike. The Motley Fool recommends American Eagle Outfitters and recommends the following options: long January 2025 $47.50 calls on Nike. The Motley Fool has a disclosure policy.
Lululemon Athletica (LULU) soared on Sept. 9 after the company reported another bullish quarter of earnings and sales growth. But LULU stock didn't make much progress after that and eventually lost support at the 50-day moving average. The company on Tuesday expanded its share repurchase program by $500 million, and that brought new buyers into LULU stock, but is Lululemon stock a buy now?
LULU stock started its latest rally soon after the company reported earnings in early June. Adjusted profit of $1.16 a share was up 404% from the year-earlier quarter. Sales jumped 88% to nearly $1.23 billion.
Lululemon's Composite Rating of 95 ranks it No. 2 in its industry group behind Boot Barn (BARN). Revolve Group (RVLV) and Buckle (BKE) are other top-rated stocks in the group, according to IBD Stock Checkup.
Headed into its earnings report, several above-average price declines knocked Lululemon's Accumulation/Distribution down to C-. The stock's up/down volume ratio also weakened to 1.1. The Acc/Dis has improved slightly to C+, but sellers have had the upper hand in recent days amid weakness in the broad market.
The Style Scores are a complementary set of indicators to use alongside the Zacks Rank. It allows the user to better focus on the stocks that are the best fit for his or her personal trading style.
Within each Score, stocks are graded into five groups: A, B, C, D and F. As you might remember from your school days, an A, is better than a B; a B is better than a C; a C is better than a D; and a D is better than an F.
As an investor, you want to buy stocks with the highest probability of success. That means you want to buy stocks with a Zacks Rank #1 or #2, Strong Buy or Buy, which also has a Score of an A or a B in your personal trading style.
Zacks' proprietary data indicates that lululemon athletica inc. is currently rated as a Zacks Rank 3 and we are expecting an inline return from the LULU shares relative to the market in the next few months. In addition, lululemon athletica inc. has a VGM Score of D (this is a weighted average of the individual Style Scores which allow you to focus on the stocks that best fit your personal trading style). Valuation metrics show that lululemon athletica inc. may be overvalued. Its Value Score of D indicates it would be a bad pick for value investors. The financial health and growth prospects of LULU, demonstrate its potential to underperform the market. It currently has a Growth Score of D. Recent price changes and earnings estimate revisions indicate this would be a good stock for momentum investors with a Momentum Score of A.
The ever popular one-page Snapshot reports are generated for virtually every single Zacks Ranked stock. It's packed with all of the company's key stats and salient decision making information. Including the Zacks Rank, Zacks Industry Rank, Style Scores, the Price, Consensus & Surprise chart, graphical estimate analysis and how a stocks stacks up to its peers.
The detailed multi-page Analyst report does an even deeper dive on the company's vital statistics. In addition to all of the proprietary analysis in the Snapshot, the report also visually displays the four components of the Zacks Rank (Agreement, Magnitude, Upside and Surprise); provides a comprehensive overview of the company business drivers, complete with earnings and sales charts; a recap of their last earnings report; and a bulleted list of reasons to buy or sell the stock. It also includes an industry comparison table to see how your stock compares to its expanded industry, and the S&P 500.
The Value Scorecard identifies the stocks most likely to outperform based on its valuation metrics. This list of both classic and unconventional valuation items helps separate which stocks are overvalued, rightly lowly valued, and temporarily undervalued which are poised to move higher. 041b061a72