Lululemon Athletica Inc (LULU, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $361.37, Lululemon Athletica Inc has witnessed a daily gain of 2.52%, marked against a three-month change of -25.06%. A thorough analysis, underlined by the GF Score, suggests that Lululemon Athletica Inc is well-positioned for substantial growth in the near future.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 8/10
- Profitability rank: 10/10
- Growth rank: 10/10
- GF Value rank: 10/10
- Momentum rank: 10/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With a particularly high Financial Strength and Profitability Rank, GuruFocus assigned Lululemon Athletica Inc the GF Score of 100 out of 100, which signals the highest outperformance potential.
Understanding Lululemon Athletica Inc's Business
Lululemon Athletica Inc, with a market cap of $45.53 billion and sales of $9.62 billion, operates with an impressive operating margin of 22.95%. The company designs, distributes, and markets athletic apparel, footwear, and accessories for women, men, and girls. Lululemon offers a variety of products for leisure and athletic activities such as yoga and running, including pants, shorts, tops, and jackets. Additionally, the company sells fitness accessories like bags, yoga mats, and equipment. Lululemon's products are sold through more than 700 company-owned stores in about 20 countries, e-commerce, outlets, and wholesale accounts. Founded in 1998 and based in Vancouver, Canada, Lululemon has established itself as a leading brand in the athletic apparel industry.
Financial Strength Breakdown
According to the Financial Strength rating, Lululemon Athletica Inc's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. With an Altman Z-Score of 12.87, Lululemon Athletica Inc exhibits a strong defense against financial distress, highlighting its robust financial stability. With a favorable Debt-to-Revenue ratio of 0.15, Lululemon Athletica Inc's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows Lululemon Athletica Inc's impressive standing among its peers in generating profit. The company's Operating Margin has increased over the past five years, with the most recent figure at 22.95%. Furthermore, Lululemon Athletica Inc's Gross Margin has also seen a consistent rise, reaching 58.31% in the latest year. This trend underscores the company's growing proficiency in transforming revenue into profit. The Piotroski F-Score confirms Lululemon Athletica Inc's solid financial situation, and its strong Predictability Rank of 4.0 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, Lululemon Athletica Inc demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 31.1%, which outperforms better than 90.08% of companies in the Retail - Cyclical industry. Moreover, Lululemon Athletica Inc has seen a robust increase in its EBITDA over the past few years, with a three-year growth rate of 37 and a five-year rate of 27.2. This trend accentuates the company's continued capability to drive growth.
Next Steps
Considering Lululemon Athletica Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. With a perfect score of 100, Lululemon Athletica Inc stands out as a compelling investment opportunity for those seeking companies with strong financial foundations and growth prospects. Investors looking to capitalize on such high-performing stocks can explore more options with the GF Score Screen available to GuruFocus Premium members.
As Lululemon Athletica Inc continues to innovate and expand its global presence, the question remains: how will the company leverage its financial and competitive strengths to maintain its growth trajectory and reward its investors? Only time will tell, but the indicators suggest a bright future ahead.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
