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Thursday, October 1, 2020

Lululemon Athletica Inc. (NASDAQ:LULU) on the Path to Profitability

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The Lululemon Athletica Inc. (LULU) shares are trading at higher $315.20 and the avg recommendation for the stock is Moderate Buy. while the current analyst price target stands at $320.74.

To add more color to this target, the company’s high over the last year is $324.76 and the low is $128.85. Over the last 52 weeks, LULU is down -2.94% while the S&P 500 is down -0.57%. The catalyst for this interesting swing was the company’s recent earnings report.

A Notable Earnings Report

In the last quarter, LULU reported a profit of $334.4 million. Lululemon Athletica Inc. also saw revenues increase to $651.96 million. In addition, LULU has free cash flow of -$173.34 million as of 04-2020. The company’s EBITDA came in at $76.28 million which compares well with its peers.

LULU booked profit margins of 15.00%, its Return on Equity (ROE) is 33.30%, and its Return on Assets is 19.20%. All told, it is clear that, LULU needs to be on your watchlist.

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Of course, we must look beyond the financials and question how well those numbers represent the sustainable earnings power of the business. Investors need to know how sustainable this current run. LULU has a short ratio of 1.80 and outstanding shares of 130.25M.

Company Outlook

LULU has seen increased volume after this news and investors are putting their support behind the value proposition. Furthermore, 10-day volume stands at 2.31 million and more growth is possible in the weeks ahead. Traders will also note the company’s earnings per share came in at 4.42. Lululemon Athletica Inc. LULU also noted assets of $3.2 billion at the end of the last quarter. Investors should also keep an eye on sector updates as LULU has historically followed its peers on positive news.

All told, Lululemon Athletica Inc. LULU has strung together solid data and demonstrated underlying fundamentals. At its current valuation, LULU represents an interesting risk/reward case. Traders should stay tuned to see if this recent report will push the stock to test recent resistance levels.

Lululemon Athletica Inc. LULU is now commanding a market cap of 41.56B and a float of 115.35M. LULU is increasing its credibility in this sector and that could lead to more upside down the line. Sign-up for continuing coverage on shares of LULU stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in LULU, either long or short, and we have not been compensated for this article.

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