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

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Lululemon (LULU - Free Report) closed at $167.51 in the latest trading session, marking a -3.44% move from the prior day. The stock's performance was behind the S&P 500's daily loss of 2.71%. Elsewhere, the Dow lost 1.9%, while the tech-heavy Nasdaq lost 3.56%.

Prior to today's trading, shares of the athletic apparel maker had gained 4.64% outpaced the Consumer Discretionary sector's loss of 3.63% and the S&P 500's gain of 3.5%.

The investment community will be closely monitoring the performance of Lululemon in its forthcoming earnings report. On that day, Lululemon is projected to report earnings of $2.22 per share, which would represent a year-over-year decline of 22.65%. Alongside, our most recent consensus estimate is anticipating revenue of $2.49 billion, indicating a 3.75% upward movement from the same quarter last year.

In terms of the entire fiscal year, the Zacks Consensus Estimates predict earnings of $12.9 per share and a revenue of $10.98 billion, indicating changes of -11.89% and +3.69%, respectively, from the former year.

Investors should also note any recent changes to analyst estimates for Lululemon. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional rating system.

The Zacks Rank system, running from #1 (Strong Buy) to #5 (Strong Sell), holds an admirable track record of superior performance, independently audited, with #1 stocks contributing an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has shifted 0.03% downward. At present, Lululemon boasts a Zacks Rank of #5 (Strong Sell).

With respect to valuation, Lululemon is currently being traded at a Forward P/E ratio of 13.45. This indicates a discount in contrast to its industry's Forward P/E of 14.8.

It is also worth noting that LULU currently has a PEG ratio of 10.84. 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. The Textile - Apparel industry had an average PEG ratio of 2.17 as trading concluded yesterday.

The Textile - Apparel industry is part of the Consumer Discretionary sector. At present, this industry carries a Zacks Industry Rank of 222, placing it within the bottom 11% of over 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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