Lululemon Athletica Inc.
Lululemon Athletica Inc. Fundamental Analysis
Lululemon Athletica Inc. (LULU) shows strong financial fundamentals with a PE ratio of 12.72, profit margin of 15.72%, and ROE of 39.78%. The company generates $10.5B in annual revenue with strong year-over-year growth of 10.07%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 82.2/100 based on profitability, valuation, growth, and balance sheet metrics. The B+ grade reflects solid fundamentals with room for improvement in valuation or growth.
Fundamental Health Score
We analyze LULU's fundamental strength across five key dimensions:
Efficiency Score
ExcellentLULU demonstrates superior asset utilization.
Valuation Score
ExcellentLULU trades at attractive valuation levels.
Growth Score
ExcellentLULU delivers strong and consistent growth momentum.
Financial Health Score
ExcellentLULU maintains a strong and stable balance sheet.
Profitability Score
ExcellentLULU achieves industry-leading margins.
Key Financial Metrics
Is LULU Expensive or Cheap?
P/E Ratio
LULU trades at 12.72 times earnings. This suggests potential undervaluation.
PEG Ratio
When adjusting for growth, LULU's PEG of -6.69 indicates potential undervaluation.
Price to Book
The market values Lululemon Athletica Inc. at 4.92 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 6.85 times EBITDA. This is generally considered low.
How Well Does LULU Make Money?
Net Profit Margin
For every $100 in sales, Lululemon Athletica Inc. keeps $15.72 as profit after all expenses.
Operating Margin
Core operations generate 22.12 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $39.78 in profit for every $100 of shareholder equity.
ROA
Lululemon Athletica Inc. generates $21.88 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Lululemon Athletica Inc. produces operating cash flow of $1.76B, showing steady but balanced cash generation.
Free Cash Flow
Lululemon Athletica Inc. generates strong free cash flow of $1.07B, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $9.52 in free cash annually.
FCF Yield
LULU converts 5.38% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
12.72
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
-6.69
vs 25 benchmark
P/B Ratio
Price to book value ratio
4.92
vs 25 benchmark
P/S Ratio
Price to sales ratio
1.89
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.39
vs 25 benchmark
Current Ratio
Current assets to current liabilities
2.13
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.40
vs 25 benchmark
ROA
Return on assets percentage
0.22
vs 25 benchmark
ROCE
Return on capital employed
0.40
vs 25 benchmark
How LULU Stacks Against Its Sector Peers
| Metric | LULU Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 12.72 | 25.25 | Better (Cheaper) |
| ROE | 39.78% | 1170.00% | Weak |
| Net Margin | 15.72% | 742.00% | Weak |
| Debt/Equity | 0.39 | 0.77 | Strong (Low Leverage) |
| Current Ratio | 2.13 | 9.19 | Strong Liquidity |
| ROA | 21.88% | -6467.00% (disorted) | Strong |
LULU outperforms its industry in 4 out of 6 key metrics, particularly excelling in ROA, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Lululemon Athletica Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
180.40%
Industry Style: Cyclical, Growth, Discretionary
High GrowthEPS CAGR
196.20%
Industry Style: Cyclical, Growth, Discretionary
High GrowthFCF CAGR
257.83%
Industry Style: Cyclical, Growth, Discretionary
High Growth