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Category: Stock Market and Lululemon
Date: 28 March 2020 Stock Price: $188.44 We take a look at the 4th quarter earnings for their 2019 fiscal year of Lululemon a sports apparel company with their latest quarterly sales topping $1.3 billion. However the group warned of Covid-19 related troubles coming
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About Lululemon
lululemon athletica inc. (NASDAQ:LULU) is a healthy lifestyle inspired athletic apparel company for yoga, running, training, and most other sweaty pursuits, creating transformational products and experiences which enable people to live a life they love. Setting the bar in technical fabrics and functional designs, lululemon works with yogis and athletes in local communities for continuous research and product feedback.
Overview of Lululemon's 4th quarter 2019 earnings report
The data below refers to the latest quarter's data unless specified otherwise
- Net sales: $1.397 billion (up from $1.167 billion from the same quarter of the previous year)
- Lululemon's net sales increase by 19.7% over the last 12 months
- Cost of goods sold : $586.665 million (up from $498.875 million for the same quarter of the previous year)
- Cost of goods sold increased by 17.5% over the last 12 months.
- Some margin expansion being experienced by Lululemon as revenue grew at a faster rate than their cost of sales for the 4th quarter of their 2019 fiscal year
- Net income: $298.021 million (up from from $218.465 million for the same quarter of the previous year)
- Diluted earnings per share: $2.28 (up from $1.65 for the same quarter of the previous year)
- PE ratio: 57.5 (based on the earnings per share for the current quarter being reported for full fiscal year)
- Diluted weighted-average shares outstanding: 130.805 million (down from 133.077 million for the same quarter of the previous year)
- Cash and cash equivalents: $586.153 million
- Cash and cash equivalents per share: $4.48
- Cash and cash equivalents makes up 2.03% of Lululemon's current market capital
- Cash and cash equivalents makes up 20.52% of Lululemon's total assets
- Inventories: $627.102 million (up from $404.842 million for the same quarter of the previous year)
- Inventories makes up 21.96% of Lululemons total assets
- Inventories grew by 54.9% over the last year
- It is concerning to see Lululemons inventories build up so strongly with the value of their inventories increased by over 50% over the last 12 months
- Cash generated from operations: $95.106million
- Cash generated from operations per share: $0.73
- Total shareholders' equity of Lululemon's: $2.855 billion
- Shareholders' equity per share: $21.83
- Lululemon is trading at 10.12 times ist stockholders equity which is well outside the expected range of between 2 and 4 times that most firms tend to trade at
Lululemon's management commentary on their 4th quarter 2019 earnings report
VANCOUVER, British Columbia--(BUSINESS WIRE)--Mar. 26, 2020-- lululemon athletica inc. (NASDAQ:LULU) today announced financial results for the fourth quarter and fiscal year ended February 2, 2020
Calvin McDonald, Chief Executive Officer, commented: "2019 was a strong year for lululemon, as our teams executed against our Power of Three growth plan. We are now navigating an extraordinary environment, which is currently impacting our business. The strength of our brand and strong financial position will help us manage through the day-to-day, while continuing to effectively plan for and invest in our future." McDonald continued: "I want to thank our people around the globe for the results they delivered in 2019, and for their perseverance and commitment to our brand each and every day."
Calvin McDonald, Chief Executive Officer, commented: "2019 was a strong year for lululemon, as our teams executed against our Power of Three growth plan. We are now navigating an extraordinary environment, which is currently impacting our business. The strength of our brand and strong financial position will help us manage through the day-to-day, while continuing to effectively plan for and invest in our future." McDonald continued: "I want to thank our people around the globe for the results they delivered in 2019, and for their perseverance and commitment to our brand each and every day."
COVID-19 Coronavirus
The outbreak of the COVID-19 coronavirus has been declared a pandemic by the World Health Organization and continues to spread in the United States, Canada, and in many other countries globally. Subsequent to February 2, 2020, in line with recommendations by public health officials and in accordance with governmental authority orders, we have taken actions to close certain retail locations and to reduce operating hours. We continue to monitor the situation and work closely with local authorities to prioritize the safety of our people and guests.
In February 2020, we temporarily closed all of our retail locations in Mainland China. All but one of these locations have since reopened. In March 2020, we temporarily closed all of our retail locations in North America, Europe, Malaysia, New Zealand, and we temporarily closed our distribution center in Sumner, WA. These locations currently remain closed.
Fiscal 2020 Outlook
Due to the impact that COVID-19 is having across the globe, and the rapid and continuous developments, we are not providing guidance for fiscal 2020 at this time. We will provide additional updates as the situation warrants.
The outbreak of the COVID-19 coronavirus has been declared a pandemic by the World Health Organization and continues to spread in the United States, Canada, and in many other countries globally. Subsequent to February 2, 2020, in line with recommendations by public health officials and in accordance with governmental authority orders, we have taken actions to close certain retail locations and to reduce operating hours. We continue to monitor the situation and work closely with local authorities to prioritize the safety of our people and guests.
In February 2020, we temporarily closed all of our retail locations in Mainland China. All but one of these locations have since reopened. In March 2020, we temporarily closed all of our retail locations in North America, Europe, Malaysia, New Zealand, and we temporarily closed our distribution center in Sumner, WA. These locations currently remain closed.
Fiscal 2020 Outlook
Due to the impact that COVID-19 is having across the globe, and the rapid and continuous developments, we are not providing guidance for fiscal 2020 at this time. We will provide additional updates as the situation warrants.
Lululemon (NASDAQ: LULU) stock price history
The image below shows the stock price history of Lululemon for the last 5 years, and its been a very very good time for Lululemon stockholders. 5 years ago the stock was trading at $52.90 and its currently trading at $221.62. That's a whopping 318.9% return over the last 5 years. No stockholder will ever say no to those kind of returns.
The stock of Lululemon is trading at a lost closer to its 52 week high of $235.50 than it is to its 52 week low of $110.71 which to us is a clear indication that the short term sentiment and momentum of Lululemon stock is very positive at this point in time.
The stock of Lululemon is trading at a lost closer to its 52 week high of $235.50 than it is to its 52 week low of $110.71 which to us is a clear indication that the short term sentiment and momentum of Lululemon stock is very positive at this point in time.
Recent coverage of Lululemon
The extract below covers the latest regarding Lululemon as obtained from TheStreet.com .
Shares of Lululemon (LULU) were falling slightly after a solid fourth quarter earnings report that reflected a period largely before the coronavirus pandemic took hold. The stock fell 1.89% to $197 a share, after having risen 3.71% in regular trading hours. The company withdrew guidance and said it is closing stores.
Adjusted diluted earnings per share for the quarter ended February 2 came in at $2.28, beating Wall Street’s estimates of $2.25. Revenue was $1.4 billion, beating estimates of $1.83 billion. Comparable sales increased 20% year-over-year, beating estimates of 16.2%, while store openings took a hit.
Read the original article here
Shares of Lululemon (LULU) were falling slightly after a solid fourth quarter earnings report that reflected a period largely before the coronavirus pandemic took hold. The stock fell 1.89% to $197 a share, after having risen 3.71% in regular trading hours. The company withdrew guidance and said it is closing stores.
Adjusted diluted earnings per share for the quarter ended February 2 came in at $2.28, beating Wall Street’s estimates of $2.25. Revenue was $1.4 billion, beating estimates of $1.83 billion. Comparable sales increased 20% year-over-year, beating estimates of 16.2%, while store openings took a hit.
Read the original article here
Lululemon (NASDAQ: LULU) latest stock valuation
Based on Lululemon's 4th quarter 2019 earnings report from Lululemon what do we value their stock at? Based on Lululemon's earnings reported and their full fiscal 2019 earnings our valuation model provides a target price (full value) price of $151.90 a Lululemon stock (up slightly from our 3rd quarter 2019 earnings report valuation of Lululemon).
We therefore believe that the stock of Lululemon is overvalued. We usually recommend that long term fundamental and value investors look to enter a stock at least 10% below our target price which in this case is $151.90. A good entry point into Lululemon would therefore be at $136.70 or below. Since the stock of Lululemon is trading at well above our target price we rate the stock of Lululemon as avoid.
We expect it to pull back strongly from current levels to levels closer to our target price in coming weeks and months.
We therefore believe that the stock of Lululemon is overvalued. We usually recommend that long term fundamental and value investors look to enter a stock at least 10% below our target price which in this case is $151.90. A good entry point into Lululemon would therefore be at $136.70 or below. Since the stock of Lululemon is trading at well above our target price we rate the stock of Lululemon as avoid.
We expect it to pull back strongly from current levels to levels closer to our target price in coming weeks and months.
Next earnings release of Lululemon
It is expected that Lululemon will release their 1st quarter 2020 earnings report in early June 2020