Is Lulu a buy before earnings?

Advice: Given the current information and market analysis, it is advisable to hold off on buying Lululemon Athletica Inc. (LULU) stock before earnings are released.

Analysis:

1. Earnings Performance: Lululemon Athletica's Basic EPS has shown variability in recent quarters, with a significant decrease from $3.38 in Q4 2022 to $0.92 in Q3 2023. However, there was an uptick to $2.28 in Q1 2024, indicating some stability. The average estimate EPS for Q4 2023 is $14.07, which suggests a strong potential for earnings growth.

2. Valuation Metrics: The P/E ratio stands at 56.76, reflecting a premium valuation. While this may indicate investor confidence, it also carries the risk of overvaluation. The company's revenue growth rate of 30.19% shows robust performance, but it's important to consider whether it can sustain this growth.

3. Market Sentiment: Citi analyst Paul Lejuez maintains a Buy rating and $520.00 price target on Lululemon Athletica, expecting a positive earnings surprise. However, he anticipates a slowdown in the US business in F24, which could impact future growth prospects.

Conclusion: Given the variability in recent earnings and the anticipated slowdown in F24, coupled with the current premium valuation, it is advisable to hold off on buying LULU stock before earnings are released. Investors should closely monitor the earnings report and assess the company's guidance for future growth to make more informed investment decisions.