Lululemon (LULU) Beats Stock Market Upswing: What Investors Need to Know

Lululemon (LULU) closed at $182.55 in the latest trading session, marking a +1.7% move from the prior day. The stock's performance was ahead of the S&P 500's daily gain of 0.81%. Elsewhere, the Dow saw an upswing of 0.63%, while the tech-heavy Nasdaq appreciated by 1.26%.

Shares of the athletic apparel maker witnessed a loss of 3.7% over the previous month, trailing the performance of the Consumer Discretionary sector with its loss of 2.77%, and the S&P 500's loss of 0.25%.

The upcoming earnings release of Lululemon will be of great interest to investors. It is anticipated that the company will report an EPS of $4.74, marking a 22.8% fall compared to the same quarter of the previous year. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $3.6 billion, down 0.33% from the year-ago period.

For the annual period, the Zacks Consensus Estimates anticipate earnings of $13.06 per share and a revenue of $11.07 billion, signifying shifts of -10.79% and +4.57%, respectively, from the last year.

It is also important to note the recent changes to analyst estimates for Lululemon. Such recent modifications usually signify the changing landscape of 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 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, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has shifted 0.32% upward. Lululemon is currently a Zacks Rank #3 (Hold).

In terms of valuation, Lululemon is currently trading at a Forward P/E ratio of 14.02. For comparison, its industry has an average Forward P/E of 18.25, which means Lululemon is trading at a discount to the group.

Meanwhile, LULU's PEG ratio is currently 11.31. The PEG ratio is akin to the commonly utilized P/E ratio, but this measure also incorporates the company's anticipated earnings growth rate. The Textile - Apparel was holding an average PEG ratio of 2.29 at yesterday's closing price.

The Textile - Apparel industry is part of the Consumer Discretionary sector. With its current Zacks Industry Rank of 61, this industry ranks in the top 25% of all industries, numbering over 250.

The Zacks Industry Rank gauges the strength of our 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.

To follow LULU in the coming trading sessions, be sure to utilize Zacks.com.

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This article originally published on Zacks Investment Research (zacks.com).

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