Lululemon Athletica, Inc.

Lululemon Athletica, Inc. (LULU - Snapshot Report) recently surged to a new all-time high at $73.48 after reporting another awesome quarter that included a 44% earnings surprise. With the company locked into an aggressive growth cycle that continues to crush estimates, this Zacks #1 rank stock offers a serious workout for the momentum investors of the world.

Company Description

Lululemon Athletica, Inc. designs, manufactures and sells athletic apparel for men and woman in the United States, Australia and Canada. The company sells its products through its own 134 stores, online and through third-party distributors. Lululemon has a market cap of $2.36 billion and was founded in 1998.

LULU has been a hot momentum story for the last year, with shares recently hitting a new all-time high after the company reported awesome Q3 results on Dec that easily beat expectations. Let's go ahead and take a closer look.

Third-Quarter Results

Revenue for the period was up 56% from last year to $176 million. Earnings also came in strong at 36 cents, 44% ahead of the Zacks Consensus Estimate, where the company now has an average earnings surprise of 34% over the last four quarters.

Not only did LULU see strong sales growth, it also did a great job of managing expenses, with gross margin up to 55% from 50% last year.

Strong Balance Sheet

Lululemon also enjoys the flexibility of a strong balance sheet, with cash and equivilants up $123 million from last year to $225 million and no debt.

Estimates

We saw some pretty solid movement in estimates off the good quarter, with the current year adding 18 cents to $1.41 while the next-year estimate gained 24 cents to $1.73, a bullish 23% growth projection.

Valuation

In light of recent gains, LULU does look a bit pricey, trading with a forward P/E of 49X, a sharp premium to its peers and the industry average.

2-Year Chart

On the chart, LULU has been strong for the last few years, recently jumping higher on the good quarter to hit a new all-time high at $73.48. Look for support from the longer-term trend line on any weakness, take a look below.

Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.

Read the full analyst report on LULU