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Welcome to 2 Minute Analysis. Our goal is to not only entertain, but provide value and insights about the investments you care about. Today’s episode is from this user’s request. And just a reminder, you can drop yours in the comments below. So, let’s throw 2 minutes on the clock and dive-in.
Today, we are diving into Lululemon Athletica Incorporated, ticker symbol LULU. Kicking things off here with the Quant system, it is currently a Strong Sell rating on the stock, and we’re going to dive into the metrics as to why in just a moment.
Jumping over to the Seeking Alpha Analysts in aggregate, they have a Buy rating on the stock, and that’s 29 analysts providing coverage in the last 30-days. Lastly, Wall Street has a Hold rating on the stock in aggregate covered by 34 analysts in the last 90-days. To learn more about how the Seeking Alpha Quant system and Seeking Alpha Analysts outperform the market, visit the link in the description of this video.
So, let’s dive deeper. This is a $21.1 billion market capitalization company found within the consumer discretionary sector and apparel, accessories and luxury goods industry. Competitors include the likes of Nike and Adidas.
Now, let’s dive into the Valuation grade here, which is a C+. And that is due to things such as the EV/EBITDA metric, which is currently tracking at 8.11, compared to the sector at 10.48. And if we look at Enterprise Value/EBIT, that is 10.01, compared to the sector at 16.44, showing the market giving lower multiple on operating income here. However, the one thing to point out is this PEG ratio, which is 1.76, compared to the sector at 1.73, which is in-line. However, the one thing to point out is that it is 16% below its five year average at 2.11, showing a few early warning signs here to investors.
Jumping over to the Growth grade, which is currently a D, we’re focusing on the EBITDA growth forward looking metric here, which is 0.72%. That’s even underneath one, compared to the sector at 4.16%, is a discount of 82%. Not a good look there.
Jumping into Profitability, which is currently in A grade, the net income margin of 16.38% is way above the sector at 4.35% and even above the five year average for Lululemon.
Looking at Momentum, it is currently an F grade, and that’s because the one year price performance of this stock is down 40%. And even worse to watch is seeing the last three month price performance of negative 18.53%.
Lastly, bringing it home with the Revisions grade, which is currently D+, and that is due to there being 30 down revisions for earnings per share over the last three months with zero up revisions. And then when we look at revenue, well, that’s one up revision and 27 down revisions, not seeing a lot of strong market sentiment for this stock right now.
Now, that’s going to wrap it up for this episode. If you have a ticker you want us to cover, add it to the comment section below, and don’t forget to follow Seeking Alpha so you get notified when the next 2 Minute Analysis gets published.
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