Is Lululemon Athletica Inc (LULU) Stock Over or Undervalued? (2024)

FAQs

Is Lululemon Athletica Inc (LULU) Stock Over or Undervalued? ›

As of 2024-06-07, the Fair Value of Lululemon Athletica Inc (LULU) is 320.82 USD. This value is based on the Peter Lynch's Fair Value formula. With the current market price of 323.03 USD, the upside of Lululemon Athletica Inc is -0.7%.

The stock seems fairly valued at the moment according to our valuation model. It's trading around 7.3% below our intrinsic value, which means if you buy Lululemon Athletica today, you'd be paying a reasonable price for it.

According to S&P Global Market Intelligence, the consensus analyst target price for LULU stock is $405.47, representing implied upside of more than 30% to current levels. Meanwhile, the consensus recommendation is a Buy.

The intrinsic value of one LULU stock under the Base Case scenario is 340.73 USD. Compared to the current market price of 308.27 USD, Lululemon Athletica Inc is Undervalued by 10%.

Before its latest earnings results, Lululemon's shares were down roughly 40% year to date, driven by fears of slowing growth in the core Americas market and more recently on the departure of its Chief Product Officer Sun Choe, who was known for bringing constant innovation to Lululemon's products.

For the first quarter of 2024, compared to the first quarter of 2023: Net revenue increased 10% to $2.2 billion , or increased 11% on a constant dollar basis. Americas net revenue increased 3%, or 4% on a constant dollar basis. International net revenue increased 35%, or 40% on a constant dollar basis.

Lululemon's P/E ratio grew from about 42x at the end of FY 2021 to 47x at the end of FY 2022. While the ratio declined to around 40x at the end of FY 2023, the company's current 28x levels, remain 30% lower than the levels of FY 2023.

Lululemon Sinks 15% on Slower US Store Traffic, Weaker Outlook. Lululemon Athletica Inc. slumped the most since the start of the pandemic after reporting a slowdown in its US business and lower-than-expected outlooks for the first quarter and full year.

What Happened: Shares of athletic apparel and accessories retailer Lululemon (NASDAQ:LULU) fell 18.9% in the morning session after the company reported fourth-quarter results and provided full-year revenue and earnings guidance, which fell short of Wall Street's estimates.

Based on 22 Wall Street analysts offering 12 month price targets for Lululemon Athletica in the last 3 months. The average price target is $434.62 with a high forecast of $550.00 and a low forecast of $240.00. The average price target represents a 40.99% change from the last price of $308.27.

Why did Lululemon get in trouble? ›

Wilson stepped down as Lululemon chairman in 2013 amid controversial remarks regarding birth control and his support of libertarian philosopher Ayn Rand. He also said what motivated a scandal around the company's see-through pants that year was that “some women's bodies just actually don't work for it.”

As of 2024-06-06, the Fair Value of Lululemon Athletica Inc (LULU) is 320.82 USD. This value is based on the Peter Lynch's Fair Value formula. With the current market price of 308.27 USD, the upside of Lululemon Athletica Inc is 4.1%.

As of today (2024-05-31), Lululemon Athletica's Intrinsic Value: Projected FCF is $116.00. The stock price of Lululemon Athletica is $310.55.

Hutchinson said there is a risk that Lululemon could lower its fiscal 2024 revenue growth guidance of 10% to 11% - she expects growth of 9.4% - but given how far the stock has fallen, she believes that cut has already been priced in.