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Lululemon (LULU) Stock Sinks As Market Gains: Here's Why

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In the latest close session, Lululemon (LULU - Free Report) was down 2.64% at $195.19. The stock's change was less than the S&P 500's daily gain of 0.03%. Elsewhere, the Dow lost 0.03%, while the tech-heavy Nasdaq lost 0.01%.

Shares of the athletic apparel maker witnessed a loss of 11.33% over the previous month, trailing the performance of the Consumer Discretionary sector with its gain of 0.32%, and the S&P 500's gain of 3.46%.

The investment community will be paying close attention to the earnings performance of Lululemon in its upcoming release. The company is expected to report EPS of $2.86, down 9.21% from the prior-year quarter. Simultaneously, our latest consensus estimate expects the revenue to be $2.53 billion, showing a 6.91% escalation compared to the year-ago quarter.

For the full year, the Zacks Consensus Estimates are projecting earnings of $14.42 per share and revenue of $11.18 billion, which would represent changes of -1.5% and +5.6%, respectively, from the prior year.

It's also important for investors to be aware of any recent modifications to analyst estimates for Lululemon. Recent revisions tend to reflect the latest near-term business trends. Therefore, positive revisions in estimates convey analysts' confidence in the business performance and profit potential.

Based on our research, we believe these estimate revisions are directly related to near-term 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. Over the last 30 days, the Zacks Consensus EPS estimate has moved 0.47% lower. Lululemon is currently sporting a Zacks Rank of #4 (Sell).

With respect to valuation, Lululemon is currently being traded at a Forward P/E ratio of 13.9. This valuation marks a discount compared to its industry average Forward P/E of 15.78.

Also, we should mention that LULU has a PEG ratio of 1.71. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. LULU's industry had an average PEG ratio of 1.85 as of yesterday's close.

The Textile - Apparel industry is part of the Consumer Discretionary sector. This industry, currently bearing a Zacks Industry Rank of 93, finds itself in the top 38% echelons of all 250+ industries.

The Zacks Industry Rank assesses the vigor of our specific industry groups by computing the average Zacks Rank of the individual stocks incorporated in the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Don't forget to use Zacks.com to keep track of all these stock-moving metrics, and others, in the upcoming trading sessions.


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