Lululemon Athletica Inc (LULU)'s Winning Formula: Financial Metrics and Competitive Strengths

Decoding the Success Behind Lululemon Athletica Inc's Robust Market Position

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 $499.20, Lululemon Athletica Inc has witnessed a daily loss of 0.7%, marked against a three-month change of 26.5%. 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.

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 high ranks in profitability and growth, and a slightly lower but still strong GF Value rank, GuruFocus assigned Lululemon Athletica Inc a GF Score of 97 out of 100, which signals the highest outperformance potential.

Understanding Lululemon Athletica Inc's Business

Lululemon Athletica Inc, with a market cap of $62.99 billion and sales of $9.19 billion, operates with a healthy operating margin of 21.94%. 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 sells its products through more than 670 company-owned stores in 19 countries, e-commerce, outlets, and wholesale accounts. Founded in 1998 and based in Vancouver, Canada, Lululemon Athletica Inc 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 18.42, Lululemon Athletica Inc exhibits a strong defense against financial distress, highlighting its robust financial stability. With a favorable Debt-to-Revenue ratio of 0.13, 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 recent figures showing a consistent performance around 21%. Furthermore, Lululemon Athletica Inc's Gross Margin has also seen a consistent rise over the past five years, underscoring 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 3.5 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 27.8%, which outperforms 88.48% of companies in the Retail - Cyclical industry. Moreover, Lululemon Athletica Inc has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years, emphasizing 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. Investors looking for similar opportunities can explore more companies with strong GF Scores using the GF Score Screen provided by GuruFocus Premium services. As Lululemon Athletica Inc continues to innovate and expand, it remains a compelling choice for value investors seeking growth and stability in the dynamic retail sector.

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.


I/We may personally own shares in some of the companies mentioned above. However, those positions are not material to either the company or to my/our portfolios.