Lululemon Athletica Inc.: A Hidden Gem for Growth Investors
If you haven’t heard about Lululemon Athletica Inc. (NASDAQ: LULU) yet, it’s time to pay attention to this rising star in the world of athletic apparel and fitness fashion. As an eToro investor, I want to share my insights into why I’m bullish on Lululemon and its promising future.
A Snapshot of Success
Lululemon is engaged in the design, distribution, and retail of technical athletic apparel, footwear, and accessories. The Company’s segments include company-operated stores and direct to consumer. Its apparel assortment includes items like pants, shorts, tops, and jackets designed for a healthy lifestyle, encompassing athletic activities such as yoga, running, training, and more. It also offers apparel designed for those on the move and fitness-inspired accessories.
But what really sets Lululemon apart is its commitment to quality and innovation. Here’s a quick look at their recent second-quarter results:
– EPS: Surging from US$2.27 in 2Q 2023 to an impressive US$2.69.
– Revenue: Boasting an 18% increase from 2Q 2023, reaching US$2.21 billion.
– Net Income: Climbing 18% as well, hitting US$341.6 million.
– Profit Margin: Holding steady at 16%, in line with 2Q 2023.
What’s remarkable is that Lululemon didn’t just meet expectations; they exceeded them. Revenue outperformed analyst estimates by 1.7%, while EPS surpassed expectations by an impressive 5.6%.
A Growth Story Like No Other
Looking forward, the growth prospects for Lululemon are undeniably exciting. The company is projected to achieve an average annual revenue growth rate of 11% over the next three years, significantly outpacing the Luxury industry’s forecasted 7.5% growth in the US.
Over the past three years, Lululemon has seen its earnings per share soar by an average of 21% annually, yet the share price has only increased by 4% per year. This suggests that the stock might be undervalued, given its stellar earnings growth history.
Moreover, Lululemon’s 10-year total return is a staggering 470.57%, showcasing its consistent and impressive performance over the long term.
With a return on equity (ROE) of 28.5% and net margins of 11.4%, Lululemon is in a strong financial position. The company is expected to continue its impressive growth trajectory, with earnings and revenue projected to grow by 17.7% and 11.3% per annum, respectively. EPS is anticipated to surge by 19.1%, while ROE is forecasted to reach 33.7% in three years.
Leadership and Financial Stability
Lululemon’s leadership, including CEO Calvin McDonald, brings a wealth of experience to the table, with an average tenure of 5.08 years. McDonald’s total yearly compensation of $15.66 million demonstrates his commitment to the company’s success.
One standout aspect is Lululemon’s solid financial structure. The company boasts a debt-to-equity ratio of 0%, with total assets of $6.0 billion and total liabilities of $2.5 billion. This financial stability positions Lululemon for continued growth and investment in its business.
Conclusion: Why I’m Long on Lululemon
In a world where staying active and looking good while doing it is becoming increasingly important, Lululemon Athletica Inc. stands out as a top performer. I’m long on Lululemon because I believe in its growth potential, resilient business model, and consistent innovation.
For those who haven’t explored this company yet, now might be the time to consider it. Lululemon is not just about yoga pants; it’s about a brand that understands the intersection of fashion, fitness, and lifestyle. As a growth investor, I see tremendous potential in Lululemon, and I’m excited to be part of this journey.
