Lululemon (LULU) closed at $222.19 in the latest trading session, marking a -2.93% move from the prior day. The stock's performance was behind the S&P 500's daily loss of 0.4%. On the other hand, the Dow registered a loss of 0.98%, and the technology-centric Nasdaq increased by 0.18%.
Heading into today, shares of the athletic apparel maker had lost 5.14% over the past month, lagging the Consumer Discretionary sector's gain of 6.85% and the S&P 500's gain of 4.97%.
The investment community will be paying close attention to the earnings performance of Lululemon in its upcoming release. On that day, Lululemon is projected to report earnings of $2.87 per share, which would represent a year-over-year decline of 8.89%. Meanwhile, the latest consensus estimate predicts the revenue to be $2.54 billion, indicating a 7.05% increase compared to the same quarter of the previous year.
For the full year, the Zacks Consensus Estimates are projecting earnings of $14.49 per share and revenue of $11.19 billion, which would represent changes of -1.02% and +5.71%, respectively, from the prior year.
It is also important to note the recent changes to analyst estimates for Lululemon. Recent revisions tend to reflect the latest near-term business trends. Hence, positive alterations in estimates signify analyst optimism regarding the business and profitability.
Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. To take advantage of this, we've established the Zacks Rank, an exclusive model that considers these estimated changes and delivers an operational rating system.
The Zacks Rank system, running from #1 (Strong Buy) to #5 (Strong Sell), holds an admirable track record of superior performance, independently audited, with #1 stocks contributing an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.02% higher. Lululemon presently features a Zacks Rank of #4 (Sell).
With respect to valuation, Lululemon is currently being traded at a Forward P/E ratio of 15.8. This valuation marks a premium compared to its industry average Forward P/E of 14.37.
Investors should also note that LULU has a PEG ratio of 1.94 right now. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. As the market closed yesterday, the Textile - Apparel industry was having an average PEG ratio of 2.03.
The Textile - Apparel industry is part of the Consumer Discretionary sector. This industry currently has a Zacks Industry Rank of 230, which puts it in the bottom 7% of all 250+ industries.
The Zacks Industry Rank evaluates the power of our distinct industry groups by determining the average Zacks Rank of the individual stocks forming the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
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lululemon athletica inc. (LULU): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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