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

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In the latest trading session, Lululemon (LULU - Free Report) closed at $305.70, marking a -1.39% move from the previous day. This move lagged the S&P 500's daily loss of 0.67%. At the same time, the Dow lost 1.23%, and the tech-heavy Nasdaq lost 0.05%.

Heading into today, shares of the athletic apparel maker had gained 17.7% over the past month, outpacing the Consumer Discretionary sector's gain of 6.24% and the S&P 500's gain of 7.79% in that time.

Investors will be hoping for strength from Lululemon as it approaches its next earnings release. In that report, analysts expect Lululemon to post earnings of $1.86 per share. This would mark year-over-year growth of 12.73%. Our most recent consensus estimate is calling for quarterly revenue of $1.77 billion, up 22.06% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $9.44 per share and revenue of $7.69 billion, which would represent changes of +21.18% and +22.94%, 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. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.37% lower. Lululemon is currently a Zacks Rank #3 (Hold).

In terms of valuation, Lululemon is currently trading at a Forward P/E ratio of 32.86. Its industry sports an average Forward P/E of 10.43, so we one might conclude that Lululemon is trading at a premium comparatively.

It is also worth noting that LULU currently has a PEG ratio of 1.64. 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. The Textile - Apparel industry currently had an average PEG ratio of 1.61 as of yesterday's close.

The Textile - Apparel industry is part of the Consumer Discretionary sector. This group has a Zacks Industry Rank of 177, putting it in the bottom 30% 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.

To follow LULU in the coming trading sessions, be sure to utilize Zacks.com.


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