Is Lululemon Athletica Inc. (LULU) positioned for future growth?

Lululemon Athletica Inc. (NASDAQ: LULU) stock fell -3.72% on Friday to $306.30 against a previous-day closing price of $318.12. With 1.61 million shares changed hands, the volume of the stock remained heavier than its average volume of 1.3 million shares. During the session, the Apparel Retail company that operates in wider Consumer Cyclical sector, reached to the highest price of $318.28 whereas the lowest price it dropped to was $306.02. The 52-week range on LULU shows that it touched its highest point at $485.83 and its lowest point at $251.51 during that stretch. It currently has a 1-year price target of $384.48. Beta for the stock currently stands at 1.27.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of LULU was down-trending over the past week, with a drop of -9.54%, but this was down by -3.05% over a month. Three-month performance surged to 6.97% while six-month performance fell -1.33%. The stock lost -28.96% in the past year, while it has lost -21.75% so far this year. A look at the trailing 12-month EPS for LULU yields 8.54 with Next year EPS estimates of 11.41. For the next quarter, that number is 1.96. This implies an EPS growth rate of 66.30% for this year and 15.37% for next year. EPS is expected to grow by 24.00% annually over the next five years; however, over the past five years, the company experienced an annual growth rate of 27.60%.

Float and Shares Shorts:

At present, 127.62 million LULU shares are outstanding with a float of 111.67 million shares on hand for trading. On Jul 14, 2022, short shares totaled 2.31 million, which was 1.81% higher than short shares on Jun 14, 2022. In addition to Mr. Calvin R. McDonald as the firm’s CEO & Director, Ms. Meghan Frank serves as its Chief Financial Officer.

Institutional Ownership:

Through their ownership of 87.79% of LULU’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 51.04% of LULU, in contrast to 36.36% held by mutual funds. Shares owned by individuals account for 18.82%. As the largest shareholder in LULU with 14.95% of the stake, Fidelity Management & Research Co holds 18,299,191 shares worth 18,299,191. A second-largest stockholder of LULU, The Vanguard Group, Inc., holds 6,741,864 shares, controlling over 5.51% of the firm’s shares. T. Rowe Price Associates, Inc. is the third largest shareholder in LULU, holding 6,197,234 shares or 5.06% stake. With a 4.16% stake in LULU, the Fidelity Growth Company Fund is the largest stakeholder. A total of 5,094,843 shares are owned by the mutual fund manager. The Vanguard Total Stock Market Index, which owns about 2.82% of LULU stock, is the second-largest Mutual Fund holder. It holds 3,455,648 shares valued at 1.04 billion. WCM Focused International Growth holds 1.55% of the stake in LULU, owning 1,899,790 shares worth 569.86 million.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for LULU since 32 analysts follow the stock currently. There are 18 analysts who recommend BUY ratings, while 1 suggest SELL ratings. Of the remaining analysts, 10 believe that the stock is worth HOLDING, 2 give it an OVERWEIGHT rating, and 1 thinks that it’s UNDERWEIGHT. In the same way, a target price assigned to a stock can also reveal much about its potential. With LULU analysts setting a high price target of $531.00 and a low target of $200.00, the average target price over the next 12 months is $391.44. Based on these targets, LULU could surge 73.36% to reach the target high and fall by -34.7% to reach the target low. Reaching the average price target will result in a growth of 27.8% from current levels.

EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy. LULU will report FY 2023 earnings on 03/28/2023. Analysts have provided yearly estimates in a range of $10.05 being high and $9.38 being low. For LULU, this leads to a yearly average estimate of $9.87. The earnings surprise of a firm occurs when the actual results change from the consensus earnings estimate. Lululemon Athletica Inc. surprised analysts by $0.34 when it reported $2.20 EPS against a consensus estimate of $1.86. The surprise factor in the prior quarter was $0.05. Based on analyst estimates, the high estimate for the next quarter is $2.02 and the low estimate is $1.90. The average estimate for the next quarter is thus $1.95.

Summary of Insider Activity:

Insiders traded LULU stock several times over the past three months with 0 Buys and 0 Sells. In these transactions, 0 shares were bought while 0 shares were sold. The number of buy transactions has increased to 23 while that of sell transactions has risen to 23 over the past year. The total number of shares bought during that period was 68,273 while 35,178 shares were sold.

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