Lululemon stock jumps 15% after fiscal 3Q16 results
Lululemon Athletica (LULU) stock soared 21% a day after it released its fiscal 3Q16 earnings on December 7, 2016. LULU finally closed at $68.84 on December 8, 15% above the previous day’s closing price. This surge resulted from better-than-expected top-line and bottom-line performance, which we have discussed through this series.
The company is currently sitting at YTD (year-to-date) gains of 31%, outdoing all of its close competitors. While Columbia Sportswear (COLM) is up 30% YTD, Under Armour (UA) and Nike (NKE) are sitting at YTD losses of 21% and 18%, respectively.
Looking at the broader apparel and accessory sector, PVH Corp. (PVH) and Michael Kors (KORS) have remained strong throughout the year. On December 8, 2016, these two companies saw YTD gains of 47% and 26%, respectively.
Dividends and share repurchase program
Lululemon (LULU) does not offer any dividends. Its competitors Nike (NKE) and Under Armour (UA) pay regular dividends to boost investor returns. NKE and UA have dividend payout ratios of 22% and 28%, respectively. The dividend payout ratio indicates the percentage of net income disbursed to shareholders in the form of dividends.
During its fiscal 3Q16 results call, Lululemon announced the approval of its $100 million share repurchase program. Companies repurchase their own shares to boost investor returns and earnings per share.
Investors seeking broad-based exposure to LULU can consider the iShares Morningstar Mid-Cap Growth ETF (JKH), which invests 0.43% of its portfolio in LULU.
Read the next part of this series to learn about Wall Street’s view on Lululemon.