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Lululemon (LULU) Gains But Lags Market: What You Should Know

Zacks Equity Research

Lululemon (LULU) closed the most recent trading day at $146.89, moving +0.17% from the previous trading session. This change lagged the S&P 500's 0.47% gain on the day. Elsewhere, the Dow gained 0.68%, while the tech-heavy Nasdaq added 0.74%.

Prior to today's trading, shares of the athletic apparel maker had gained 9.35% over the past month. This has outpaced the Consumer Discretionary sector's gain of 7.61% and the S&P 500's gain of 7.71% in that time.

LULU will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $1.74, up 30.83% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $1.15 billion, up 23.5% from the prior-year quarter.

Investors might also notice recent changes to analyst estimates for LULU. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

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Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection has moved 1.33% higher. LULU is currently sporting a Zacks Rank of #2 (Buy).

Investors should also note LULU's current valuation metrics, including its Forward P/E ratio of 33.36. This represents a premium compared to its industry's average Forward P/E of 14.8.

We can also see that LULU currently has a PEG ratio of 1.73. 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. The Textile - Apparel industry currently had an average PEG ratio of 1.36 as of yesterday's close.

The Textile - Apparel industry is part of the Consumer Discretionary sector. This group has a Zacks Industry Rank of 20, putting it in the top 8% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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