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Lululemon (LULU) Increases Yet Falls Behind Market: What Investors Need to Know

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In the latest close session, Lululemon (LULU - Free Report) was up +1.57% at $112.53. This move lagged the S&P 500's daily gain of 2.35%. Meanwhile, the Dow experienced a rise of 2.15%, and the technology-dominated Nasdaq saw an increase of 2.74%.

The athletic apparel maker's stock has climbed by 17.24% in the past month, exceeding the Consumer Discretionary sector's gain of 6.34% and the S&P 500's loss of 5.6%.

Market participants will be closely following the financial results of Lululemon in its upcoming release. The company is expected to report EPS of $0.97, down 62.55% from the prior-year quarter. Alongside, our most recent consensus estimate is anticipating revenue of $2.31 billion, indicating a 10.02% downward movement from the same quarter last year.

Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $9.55 per share and revenue of $10.5 billion, indicating changes of -27.98% and -5.21%, respectively, compared to the previous year.

Investors should also take note of any recent adjustments to analyst estimates for Lululemon. Recent revisions tend to reflect the latest near-term business trends. Hence, positive alterations in estimates signify analyst optimism regarding the business and profitability.

Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

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 last 30 days, the Zacks Consensus EPS estimate has remained unchanged. Right now, Lululemon possesses a Zacks Rank of #3 (Hold).

In terms of valuation, Lululemon is presently being traded at a Forward P/E ratio of 11.6. For comparison, its industry has an average Forward P/E of 17.87, which means Lululemon is trading at a discount to the group.

Also, we should mention that LULU has a PEG ratio of 2.64. 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. As of the close of trade yesterday, the Textile - Apparel industry held an average PEG ratio of 2.04.

The Textile - Apparel industry is part of the Consumer Discretionary sector. This industry, currently bearing a Zacks Industry Rank of 104, finds itself in the top 43% echelons 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.

Remember to apply Zacks.com to follow these and more stock-moving metrics during the upcoming trading sessions.

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