Lululemon Athletica, Inc. (LULU) just hit a new all-time high at $48.45 on the heels of the company’s excellent Q3 results from early September that included a solid 25% earning surprise. With the next-year estimate calling for 25% growth, the long-term picture looks good too for this Zacks #2 rank stock.
Although LULU sells high-end yoga and athletic apparel that might seem vulnerable to a weak consumer environment, its niche and growing popularity with wealthy customers has continued to fuel its growth. That showed up on Sep 10 when the company reported another strong quarter that sent shares jumping higher.
Third-Quarter Results
Revenue was up 56% from last year to $152 million. Earnings also came in strong at 30 cents, 25% ahead of the Zacks Consensus Estimate, lifting Lululemon’s average earnings surprise to 25% over the last four quarters.
Lots of Cash, No Debt
The company used the good quarter to further strengthen its balance sheet, with cash and equivalents more than doubling from last year to $178 million against no debt.
Looking forward, LULU aims to continue its expansion into new markets both domestically and internationally, with plans to open 25 new stores in 2011. It also has plans to continue growing its online business, where it has seen sharp sales gains over the last year.
Estimates
With LULU raising its guidance on the good quarter, the analysts were quick to follow suit, with the current year up 7 cents on the quarter to $1.22. The next-year estimate is up 5 cents in the same time to $1.48, a bullish 21% growth projection.
With shares ripping higher over the last month, the valuation picture has gotten a bit hot, with a forward P/E of 38X against the industry average of 17X.
2-Year Chart
On the chart, shares have been trending higher for most of the last 18 months, recently jumping higher to a new all-time high on the solid quarter. But in spite of the nice gains, the stochastic below the chart is signaling that shares are trading well away from over-bought territory. Look for support from the trend line on any weakness, take a look below.
Read the July 12 LULU article here
Last Week’s Momentum Zacks Rank Buy Stocks
Union Pacific Corp. (UNP) just hit a new all-time high ahead of its Oct 21, Q3 results. With estimates climbing into the number and industry cohort CSX reporting another strong quarter, this Zacks #1 stock offers some nice upward momentum. Read Full Article.
Randgold Resources Ltd. (GOLD) just hit another new all-time high above $104 on the back of surging gold prices. With the world turning to gold on fear of inflation and easy money from Central banks, this Zacks # 1 rank stock has upward momentum to boot. Read Full Article.
Perrigo Co. (GOLD) recently hit a new all-time high at $67.49 after posting an average earnings surprise of 16% over the last four quarters. With a strong industry rank and rising estimates, this Zacks #1 rank stock looks like a solid momentum pick. Read Full Article.
Esterline Technologies Corp (ESL) recently hit a new multi-year high after reporting a solid 9% Q2 earnings surprise in early September. With rising estimates and a compelling valuation, this Zacks #1 rank stock looks like a solid momentum pick. Read Full Article.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.
LULULEMON ATHLT (LULU): Free Stock Analysis Report
Zacks Investment Research
