Lululemon Stock: Gauging Performance ahead of Q4 Earnings
Lululemon’s stock price fell in 2017 after solid returns in 2016
Lululemon Athletica’s (LULU) stock recorded above-average performance in 2016, rising 24% during the year. Sportswear peers Nike (NKE) and Under Armour (UAA) were down 19% and 30% while branded apparel manufacturers V.F. Corp (VFC) and Hanesbrands (HBI) fell 14% and 27%. PVH Corp (PVH) and Columbia Sportswear (COLM) showed some strength and gained 20% and 23%, respectively, during the year.
However, 2017, hasn’t been a great year so far for LULU. The company has fallen 1.5% year-to-date (YTD). In comparison, Nike (NKE) is sitting at YTD gains of 13.7%.
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To learn about Wall Street’s view on Lululemon’s stock and its price target, read the next part of this series.
A brief look at valuations
Lululemon’s stock is currently trading at a one-year forward price-to-earnings (or PE) ratio of 26.5x, operating close to the lower end of its 52-week PE range of 24.1x to 36.5x.
In comparison, Under Armour (UAA) is currently trading at a higher earnings multiple of 47x. Nike (NKE) and Columbia Sportswear (COLM) are, however, cheaper. They’re trading at 20.5x and 23.8x, respectively.
Dividends and share repurchase program
While Lululemon doesn’t offer any dividends, its board of directors approved a $100 million share repurchase program in December last year to boost investor returns.
On the other hand, Nike and Columbia Sportswear are regular dividend payers. Their stocks offer dividend yields of 1.2% and 1.3%, respectively.
ETF investors seeking to add exposure to LULU can consider the iShares Edge MSCI Multifactor Consumer Discretionary ETF (CNDF), which invests 1.5% of its portfolio in the company.
See the next part of this series for Wall Street’s view on LULU.