Lululemon Athletica Inc. (NASDAQ: LULU)

Sector: Consumer Cyclical Industry: Apparel Retail CIK: 0001397187
Market Cap 25.43 Bn
P/B 5.65
P/E 14.61
P/S 2.30
ROIC (Qtr) 27.31
Div Yield % 0.00
Rev 1y % (Qtr) 7.06
Total Debt (Qtr) 1.76 Bn
Debt/Equity (Qtr) 0.39

About

Lululemon Athletica Inc., often known by its stock symbol LULU, operates in the competitive athletic apparel industry. The company is headquartered in Vancouver, Canada, and has a presence in over 25 countries worldwide. Lululemon's primary business activities involve designing, developing, and selling technical athletic apparel, footwear, and accessories for women and men. These products are marketed under the lululemon brand and are available through the company's strong e-commerce platform, as well as its network of company-operated stores and...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 1.86B provides robust 1.06x coverage of total debt 1.76B, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 1.04B provide 3.26x coverage of short-term debt 317.48M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 1.86B provides strong 33.04x coverage of stock compensation 56.32M, indicating sustainable incentive practices.
  • Strong tangible asset base of 7.77B provides 4.41x coverage of total debt 1.76B, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 1.13B exceeds capital expenditure of 732.58M by 1.54x, indicating strong organic growth funding capability.

Bear case

  • Operating cash flow of 1.86B barely covers its investment activities of (712.02M), with a coverage ratio of -2.61, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Cash reserves of 1.04B provide limited coverage of acquisition spending of (23.15M), which is -44.75x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Retained earnings of 4.20B provide limited buffer against comprehensive income items of (348.79M), which is -12.05x, indicating elevated exposure to market risks.
  • Operating cash flow of 1.86B is outpaced by equity issuance of (1.19B) (-1.56 ratio), indicating concerning reliance on equity markets for funding operations.
  • R&D investment of 0 represents just 0x of SG&A expenses of 4.02B, indicating potential underinvestment in innovation relative to administrative overhead.

Peer comparison

Companies in the Apparel Retail
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 TJX Tjx Companies Inc /De/ 175.80 Bn 34.34 2.98 13.19 Bn
2 ROST Ross Stores, Inc. 58.85 Bn 28.21 2.67 5.19 Bn
3 LULU lululemon athletica inc. 25.43 Bn 14.61 2.30 1.76 Bn
4 BURL Burlington Stores, Inc. 18.26 Bn 32.57 1.63 5.94 Bn
5 GAP Gap Inc 10.00 Bn 11.75 0.65 5.52 Bn
6 URBN Urban Outfitters Inc 7.11 Bn 14.53 1.18 1.18 Bn
7 ANF Abercrombie & Fitch Co /De/ 6.17 Bn 11.82 1.19 1.13 Bn
8 BOOT Boot Barn Holdings, Inc. 5.78 Bn 27.75 2.79 0.67 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 3.27 1.35
EV to Cash from Ops. EV/CFO 13.99 8.18
EV to Debt EV to Debt 14.77 4.33
EV to EBIT EV/EBIT 10.49 -60.97
EV to EBITDA EV/EBITDA 8.87 6.53
EV to Free Cash Flow [EV/FCF] EV/FCF 23.08 22.99
EV to Market Cap EV to Market Cap 1.02 2.06
EV to Revenue EV/Rev 2.35 1.11
Price to Book Value [P/B] P/B 5.65 3.23
Price to Earnings [P/E] P/E 14.61 195.16
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 0.88
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 12.58
Dividend per Basic Share Div per Share (Qtr) 0.00 0.36
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 16.33
Interest Coverage Interest Coverage 0.00 13.58
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -10.87 -5.40
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -12.84 89.63
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 1.25
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 0.29 13.95
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 5.09 -16.93
EBIT Growth (1y) % EBIT 1y % (Qtr) 1.35 10.85
EBT Growth (1y) % EBT 1y % (Qtr) 1.35 6.10
EPS Growth (1y) % EPS 1y % (Qtr) 3.90 10.94
FCF Growth (1y) % FCF 1y % (Qtr) -29.24 -129.32
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 7.94 -1.75
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.39 1.40
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.06
Cash Ratio Cash Ratio (Qtr) 0.56 0.38
Current Ratio Curr Ratio (Qtr) 2.13 1.59
Debt to Equity Ratio Debt/Equity (Qtr) 0.39 1.31
Interest Cover Ratio Interest Cover Ratio 0.00 13.58
Times Interest Earned Times Interest Earned 0.00 13.58
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 26.90 2.72
EBIT Margin % EBIT Margin % (Qtr) 22.43 -1.70
EBT Margin % EBT Margin % (Qtr) 22.43 -2.76
Gross Margin % Gross Margin % (Qtr) 58.40 40.52
Net Profit Margin % Net Margin % (Qtr) 15.70 -4.02