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Lululemon Athletica ROIC %

: 22.18% (As of Oct. 2020)
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ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Lululemon Athletica's annualized return on invested capital (ROIC %) for the quarter that ended in Oct. 2020 was 22.18%.

As of today (2021-03-08), Lululemon Athletica's WACC % is 9.23%. Lululemon Athletica's ROIC % is 24.59% (calculated using TTM income statement data). Lululemon Athletica generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.


Lululemon Athletica ROIC % Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

Lululemon Athletica Annual Data
Jan11 Jan12 Jan13 Jan14 Jan15 Jan16 Jan17 Jan18 Jan19 Jan20
ROIC % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 43.11 40.19 32.48 52.01 43.75

Lululemon Athletica Quarterly Data
Jan16 Apr16 Jul16 Oct16 Jan17 Apr17 Jul17 Oct17 Jan18 Apr18 Jul18 Oct18 Jan19 Apr19 Jul19 Oct19 Jan20 Apr20 Jul20 Oct20
ROIC % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 25.67 59.12 5.34 15.98 22.18

Competitive Comparison
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap.


Lululemon Athletica ROIC % Distribution

* The bar in red indicates where Lululemon Athletica's ROIC % falls into.



Lululemon Athletica ROIC % Calculation

Lululemon Athletica's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Jan. 2020 is calculated as:

ROIC % (A: Jan. 2020 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (A: Jan. 2019 ) + Invested Capital (A: Jan. 2020 ))/ count )
=889.11 * ( 1 - 28.06% )/( (939.543 + 1984.486)/ 2 )
=639.625734/1462.0145
=43.75 %

where

Invested Capital(A: Jan. 2019 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Cash, Cash Equivalents, Marketable Securities - max(0, Total Current Liabilities - Total Current Assets+Cash, Cash Equivalents, Marketable Securities))
=2084.711 - 263.848 - ( 881.32 - max(0, 500.477 - 1429.282+881.32))
=939.543

Invested Capital(A: Jan. 2020 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Cash, Cash Equivalents, Marketable Securities - max(0, Total Current Liabilities - Total Current Assets+Cash, Cash Equivalents, Marketable Securities))
=3281.354 - 203.363 - ( 1093.505 - max(0, 620.418 - 1807.938+1093.505))
=1984.486

Lululemon Athletica's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Oct. 2020 is calculated as:

ROIC % (Q: Oct. 2020 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (Q: Jul. 2020 ) + Invested Capital (Q: Oct. 2020 ))/ count )
=853.804 * ( 1 - 29.7% )/( (2600.65 + 2812.333)/ 2 )
=600.224212/2706.4915
=22.18 %

where

Invested Capital(Q: Jul. 2020 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Cash, Cash Equivalents, Marketable Securities - max(0, Total Current Liabilities - Total Current Assets+Cash, Cash Equivalents, Marketable Securities))
=3494.027 - 370.379 - ( 522.998 - max(0, 763.309 - 1489.755+522.998))
=2600.65

Invested Capital(Q: Oct. 2020 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Cash, Cash Equivalents, Marketable Securities - max(0, Total Current Liabilities - Total Current Assets+Cash, Cash Equivalents, Marketable Securities))
=3627.92 - 334.006 - ( 481.581 - max(0, 730.878 - 1600.813+481.581))
=2812.333

Note: The Operating Income data used here is four times the quarterly (Oct. 2020) data.

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


Lululemon Athletica  (NAS:LULU) ROIC % Explanation

ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.

There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.

Why is ROIC % important?

Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, Lululemon Athletica's WACC % is 9.23%. Lululemon Athletica's ROIC % is 24.59% (calculated using TTM income statement data). Lululemon Athletica generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases. Lululemon Athletica earns returns that do not match up to its cost of capital. It will destroy value as it grows.


Be Aware

Like ROE % and ROA %, ROIC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.


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