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Category: Stock Market and Lululemon
Date: 14 January 2020 Stock Price: $245.18 We take a look at the news released by Lululemon Athletica that it is updating its fiscal guidance for the 4th quarter of their 2019 fiscal year. And its good news for investors as it increased its earnings per share guidance by 5.6% compared to the initial guidance it provided with the release of their 3rd quarter earnings for 2019
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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.
Lululemon store entrance
Guidance update released by Lululemon
VANCOUVER, British Columbia--(BUSINESS WIRE)--Jan. 13, 2020-- lululemon athletica inc. (NASDAQ:LULU) today announced that the Company is updating its net revenue and earnings guidance for the fourth quarter of fiscal 2019 ending February 2, 2020.
Calvin McDonald, Chief Executive Officer, commented: "We're excited by the momentum in our business over the holiday period with guests responding well to our innovative merchandise offerings. The connection we have with our guests remains strong, and I want to thank our teams across the globe for their hard work and dedication throughout 2019."
For the fourth quarter of fiscal 2019, we now anticipate that net revenue will be in the range of $1.370 billion to $1.380 billion based on a total comparable sales increase in the mid to high teens on a constant dollar basis. This compares to our previous guidance of net revenue of $1.315 billion to $1.330 billion based on a total comparable sales increase in the low double digits on a constant dollar basis.
We now expect diluted earnings per share will be in the range of $2.22 to $2.25 for the fourth quarter. This compares to our previous diluted earnings per share guidance of $2.10 to $2.13. Our revised guidance for the fourth quarter continues to assume 131 million diluted weighted-average shares outstanding and a 28.5% tax rate. Members of the management team will be meeting with analysts and investors at the ICR Conference in Orlando, Florida on January 13-15, 2020.
Calvin McDonald, Chief Executive Officer, commented: "We're excited by the momentum in our business over the holiday period with guests responding well to our innovative merchandise offerings. The connection we have with our guests remains strong, and I want to thank our teams across the globe for their hard work and dedication throughout 2019."
For the fourth quarter of fiscal 2019, we now anticipate that net revenue will be in the range of $1.370 billion to $1.380 billion based on a total comparable sales increase in the mid to high teens on a constant dollar basis. This compares to our previous guidance of net revenue of $1.315 billion to $1.330 billion based on a total comparable sales increase in the low double digits on a constant dollar basis.
We now expect diluted earnings per share will be in the range of $2.22 to $2.25 for the fourth quarter. This compares to our previous diluted earnings per share guidance of $2.10 to $2.13. Our revised guidance for the fourth quarter continues to assume 131 million diluted weighted-average shares outstanding and a 28.5% tax rate. Members of the management team will be meeting with analysts and investors at the ICR Conference in Orlando, Florida on January 13-15, 2020.
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 $63 and its currently trading at $245.18. That's a whopping 289% return over the last 5 years. No stockholder will ever say no to those kind of returns.
The stock of Lululemon is trading at very close to its 52 week high of $245.35 and it is far away from its 52 week low of $130.57 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 very close to its 52 week high of $245.35 and it is far away from its 52 week low of $130.57 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.
Lululemon (NASDAQ: LULU) stock price history over the last 5 years
Lululemon (NASDAQ: LULU) latest stock valuation
Based on the latest earnings report from Lululemon as well as their fiscal guidance what do we value their stock at? Based on Lululemon's earnings reported and the fiscal guidance provided our valuation model provides a target price (full value) price of $146.60 a Lululemon stock.
We therefore believe that the stock is grossly 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 $146.60. A good entry point into Lululemon would therefore be at $131.90 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 is grossly 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 $146.60. A good entry point into Lululemon would therefore be at $131.90 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.
Lululemon store in a mall
Next earnings release of Lululemon
It is expected that Lululemon will release their 4th quarter and full fiscal 2019 earnings report in early March 2020