Lululemon Athletica (NASDAQ: LULU) has emerged as one of the most searched stocks on Zacks.com, drawing significant investor attention amid a turbulent stretch of performance.
Over the past month, shares of the athletic apparel maker have returned -12.3%, a stark contrast to the Zacks S&P 500 composite’s gain of +1.3% over the same period.
The broader Zacks Textile – Apparel industry, within which Lululemon is categorized, has also declined, shedding 5.9% during that timeframe.
Zacks prioritizes earnings estimate revisions above other indicators, operating on the principle that a stock’s fair value is determined by the present value of its future earnings stream.
Lululemon is expected to post earnings of $0.97 per share for the current quarter, which would represent a steep year-over-year decline of -62.6%.
The Zacks Consensus Estimate for that quarterly figure has shifted by -61.5% over the last 30 days, signaling significant downward pressure from Wall Street analysts.
For the current fiscal year, the consensus earnings estimate stands at $9.55, implying a year-over-year change of -28%, with that estimate having moved -12.6% lower over the past month.
Looking further ahead, the consensus estimate for the next fiscal year is $8.62, representing a further decline of -9.7% from current-year expectations, with the estimate having dropped -25.2% over the past 30 days.
Given the magnitude of these revisions, Zacks has assigned Lululemon a Rank of #5, its lowest rating, which carries a Strong Sell designation and suggests likely underperformance relative to the broader market in the near term.
On the revenue side, the consensus sales estimate for the current quarter is $2.31 billion, reflecting a year-over-year decline of -10%, while current and next fiscal year estimates of $10.5 billion and $10.58 billion imply changes of -5.5% and +0.8%, respectively.
In its most recently reported quarter, Lululemon posted revenues of $2.42 billion, a year-over-year decline of -4.3%, falling short of the Zacks Consensus Estimate of $2.47 billion by -2.07%.
Earnings per share for that same quarter came in at $2.06, down from $3.10 a year earlier, though the figure represented a positive EPS surprise of +15.08% against analyst expectations.
The company beat consensus EPS estimates in each of the trailing four quarters, while topping revenue consensus estimates in three of those four periods.
Despite the negative earnings trajectory, Lululemon receives a B grade under the Zacks Value Style Score system, suggesting the stock is currently trading at a discount relative to its peers on key valuation metrics.
Investors weighing a position in LULU must balance that relative valuation discount against the persistent and accelerating downward revisions to earnings estimates that have driven the stock’s Strong Sell classification.
