Yesterday Lululemon Athletica inc. (LULU) surged after it announced revised its fourth-quarter guidance higher. After the sheer-gate fiasco, Lululemon appears to be moving on.
Could now be an opportune moment to buy LULU before it moves higher?
Lululemon Athletica – Company Overview
Lululemon Athletica creates high-end athletic apparel designed for runners and yoga buffs who like to look good while they sweat. LULU got its start 15 years ago in a yoga studio in Vancouver, British Columbia.
Although Lululemon Athletica has since expanded to more than 250 stores across North America and Australia with more than 7,600 full-time employees worldwide, LULU maintains strong local connections by offering free workshops and yoga classes in its stores.
Lululemon Athletica – Earnings Buzz
Lululemon will report its fourth-quarter results towards the tail-end of earnings season, likely towards the end of March. It’s shaping up to be a decent report.
For Q4, Lululemon now expects net revenue of $595 million to $600 million. Previously, LULU was looking for revenue between $570 million and $585. Lululemon also expects to earn between 71 and 73 cents per share, higher than its prior guidance of 65 to 69 cents per share.
With the revised guidance, Lululemon is now headed for 14.2% – 15.2% annual sales growth and same-store sales growth in the single digits. However, because Lululemon earned 75 cents per share in Q4 2013, this quarter’s earnings will likely be less than the year ago period.
Lululemon Athletica – Current Ratings
This time last year, LULU was a D-rated “sell.” Since then, institutional buying pressure and just about every other fundamental measure has remained weak.
Aside from positive grades for Sales Growth and Return on Equity (Bs), Lululemon earns C, D and F grades for all of my other fundamental categories. LULU earns a C for its Quantitative Grade and a C for its Fundamental Grade.
As of this posting, Jan. 13, I consider LULU C-rated “hold.” While the Q4 revisions are positive news for Lululemon, it’s too soon to tell whether this is a blip on the radar or a sign of a prolonged trend.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.