Are their any other underlying issues to be concerned about other then tariffs?
When do they report next, and what is expected?
Is this a good entry point, or do you see it getting even cheaper still?
Thanks!
LULU has gone from an expensive, high growth company to a more mature company with slowing growth. When this happens, valuation multiples can change a lot. LULU is now very cheap vs historical numbers, at 13X earnings. Investors are questioning whether it can be a growth company again. It is not risk-free, but we do like its potential. It has a long history and this is not its first downturn. The balance sheet is fine and EPS is still expected to grow over the next two years. It needs a catalyst to spark investor interest, however. Some concerns are product introductions and market share, but there is also increased competition. Tariffs are still a big concern for investors, and sales per square foot is not what it used to be in its go-go days. $2.37B in sales and $2.60 in earnings per share are expected for the quarter, with results out Aug 29. There are risks here; a value stock can certainly get cheaper. But we think it is attractive at current levels for investors who can look beyond the next couple of quarters. Any positive news could change sentiment fairly quickly.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in LULU.