September 21, 2017

LULU – Markets expect LULU to see declining Uniform ROA, but management’s confidence about their growth potential and revenues implies this may be unwarranted


  • Lululemon Athletica Inc. (LULU:USA) currently trades near recent lows relative to UAFRS-based (Uniform) Earnings, with a 23.0x Uniform P/E, implying bearish expectations for the firm. However, given management’s confidence about their growth potential and revenues, this may be unwarranted
  • Specifically, management is confident about the tremendous potential ahead of them, and their ability to achieve Q3 2017 revenues in the range of $605mn-$615mn. They are also confident about the sustainability of growth in China. Should the firm succeed in preventing further declines in Uniform Turns, as management sentiment suggests, multiple expansion and equity upside would be warranted

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