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

The upcoming earnings release of Lululemon will be of great interest to investors. The company's upcoming EPS is projected at $1.79, signifying a 42.26% drop compared to the same quarter of the previous year. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $2.47 billion, down 2.26% from the year-ago period.

For the entire fiscal year, the Zacks Consensus Estimates are projecting earnings of $10.93 per share and a revenue of $11.07 billion, representing changes of -17.57% and -0.27%, respectively, from the prior year.

Any recent changes to analyst estimates for Lululemon should also be noted by investors. Such recent modifications usually signify the changing landscape of near-term business trends. Consequently, upward revisions in estimates express analysts' positivity towards the business operations and its ability to generate profits.

Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. To exploit this, we've formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable rating system.

The Zacks Rank system, spanning from #1 (Strong Buy) to #5 (Strong Sell), boasts an impressive track record of outperformance, audited externally, with #1 ranked stocks yielding an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 1.37% lower. Lululemon is holding a Zacks Rank of #5 (Strong Sell) right now.

Looking at its valuation, Lululemon is holding a Forward P/E ratio of 10.94. This valuation marks a discount compared to its industry average Forward P/E of 15.33.

We can also see that LULU currently has a PEG ratio of 3.92. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. As the market closed yesterday, the Textile - Apparel industry was having an average PEG ratio of 2.

The Textile - Apparel industry is part of the Consumer Discretionary sector. Currently, this industry holds a Zacks Industry Rank of 177, positioning it in the bottom 29% of all 250+ industries.

The strength of our individual industry groups is measured by the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within these groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.

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

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