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Lululemon (LULU) Dips More Than Broader Markets: What You Should Know

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Lululemon (LULU - Free Report) closed the most recent trading day at $324.26, moving -1.81% from the previous trading session. This change lagged the S&P 500's 1.04% loss on the day.

Coming into today, shares of the athletic apparel maker had gained 5.66% in the past month. In that same time, the Consumer Discretionary sector lost 0.13%, while the S&P 500 gained 3.83%.

Wall Street will be looking for positivity from LULU as it approaches its next earnings report date. The company is expected to report EPS of $0.90, up 309.09% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $1.11 billion, up 71.02% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $6.46 per share and revenue of $5.65 billion, which would represent changes of +37.45% and +28.42%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for LULU. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 0.05% higher within the past month. LULU is currently a Zacks Rank #4 (Sell).

Digging into valuation, LULU currently has a Forward P/E ratio of 51.1. For comparison, its industry has an average Forward P/E of 21.3, which means LULU is trading at a premium to the group.

It is also worth noting that LULU currently has a PEG ratio of 2.79. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. Textile - Apparel stocks are, on average, holding a PEG ratio of 2.36 based on yesterday's closing prices.

The Textile - Apparel industry is part of the Consumer Discretionary sector. This industry currently has a Zacks Industry Rank of 53, which puts it in the top 21% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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