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Time to Buy or Sell Lululemon's (LULU) Stock as Q1 Earnings Approach?
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Over the years, Lululemon’s (LULU - Free Report) stock has been a Wall Street darling due to the company’s popularity and growth as a leading athletic apparel retailer with a very loyal customer base.
However, LULU has now dropped -46% year to date with the decline sparked by lower-than-expected guidance for fiscal 2024. In this regard, Lululemon expects 10%-11% net revenue growth this year which is certainly solid expansion but fell below many analysts' lofty expectations.
That said, let’s see if it’s time to buy or sell Lululemon’s stock as Q1 earnings approach after-market hours on Wednesday, June 5.
Image Source: Zacks Investment Research
Q1 Expectations
As shown in the Price, Consensus & Surprise chart above, Lululemon has surpassed earnings expectations for 15 consecutive quarters but the company’s subpar outlook following its most recent Q4 report in March caused LULU to plummet.
Amid lingering concerns of softer consumer spending, Lululemon’s Q1 sales are still thought to have come in at $2.2B based on Zacks estimates which would represent a 10% increase from $2B a year ago. Plus, Q1 earnings are expected to rise 4% to $2.38 per share.
Historical Performance & Valuation
Assuming Lululemon continues to pump out sound growth despite loftier expectations, taking a look at the company’s historical performance but most importantly its valuation may be critical for investors to buy in at this juncture.
Going back five years, LULU is still up +75% and has monstrous gains of almost +600% over the last decade which has crushed its Zacks Textile-Apparel Market’s -13% while impressively topping the S&P 500’s +181% and even the Nasdaq’s +289%.
Image Source: Zacks Investment Research
More intriguing, Lululemon is trading at its cheapest forward earnings multiple since the company went public in 2007 at 21.7X. This is well below its historical P/E peak of 148.3X and a 38% discount to the historic median of 35.5X.
Image Source: Zacks Investment Research
Takeaway
It may be tempting to buy Lululemon’s stock at current levels as the apparel giant is expecting low double-digit percentage growth on its top and bottom lines in FY24 while trading at its most reasonable P/E valuation ever.
Unfortunately, LULU lands a Zacks Rank #4 (Sell) as EPS estimates for FY24 have continued to decline over the last quarter and are slightly down in the last week.
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Time to Buy or Sell Lululemon's (LULU) Stock as Q1 Earnings Approach?
Over the years, Lululemon’s (LULU - Free Report) stock has been a Wall Street darling due to the company’s popularity and growth as a leading athletic apparel retailer with a very loyal customer base.
However, LULU has now dropped -46% year to date with the decline sparked by lower-than-expected guidance for fiscal 2024. In this regard, Lululemon expects 10%-11% net revenue growth this year which is certainly solid expansion but fell below many analysts' lofty expectations.
That said, let’s see if it’s time to buy or sell Lululemon’s stock as Q1 earnings approach after-market hours on Wednesday, June 5.
Image Source: Zacks Investment Research
Q1 Expectations
As shown in the Price, Consensus & Surprise chart above, Lululemon has surpassed earnings expectations for 15 consecutive quarters but the company’s subpar outlook following its most recent Q4 report in March caused LULU to plummet.
Amid lingering concerns of softer consumer spending, Lululemon’s Q1 sales are still thought to have come in at $2.2B based on Zacks estimates which would represent a 10% increase from $2B a year ago. Plus, Q1 earnings are expected to rise 4% to $2.38 per share.
Historical Performance & Valuation
Assuming Lululemon continues to pump out sound growth despite loftier expectations, taking a look at the company’s historical performance but most importantly its valuation may be critical for investors to buy in at this juncture.
Going back five years, LULU is still up +75% and has monstrous gains of almost +600% over the last decade which has crushed its Zacks Textile-Apparel Market’s -13% while impressively topping the S&P 500’s +181% and even the Nasdaq’s +289%.
Image Source: Zacks Investment Research
More intriguing, Lululemon is trading at its cheapest forward earnings multiple since the company went public in 2007 at 21.7X. This is well below its historical P/E peak of 148.3X and a 38% discount to the historic median of 35.5X.
Image Source: Zacks Investment Research
Takeaway
It may be tempting to buy Lululemon’s stock at current levels as the apparel giant is expecting low double-digit percentage growth on its top and bottom lines in FY24 while trading at its most reasonable P/E valuation ever.
Unfortunately, LULU lands a Zacks Rank #4 (Sell) as EPS estimates for FY24 have continued to decline over the last quarter and are slightly down in the last week.