Why NASDAQ:LULU Is a Promising High-Growth Stock in the Midst of Consolidation.

Last update: Oct 8, 2024

For growth-minded investors, high revenue and EPS growth are key criteria. Today, we'll examine whether LULULEMON ATHLETICA INC (NASDAQ:LULU) fits the bill for growth investing, particularly as it forms a base and hints at a potential breakout. Remember, due diligence is essential, but LULULEMON ATHLETICA INC has caught our attention on our screen for growth with base formation. It may warrant additional investigation.

Deciphering NASDAQ:LULU's Growth Rating

ChartMill assigns a Growth Rating to each stock, ranging from 0 to 10. This rating is determined by analyzing different growth elements, including EPS and revenue growth, spanning both historical and future figures. In the case of NASDAQ:LULU, the assigned 8 reflects its growth potential:

LULU shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 18.93%, which is quite good.
The Earnings Per Share has been growing by 27.05% on average over the past years. This is a very strong growth
The Revenue has grown by 13.02% in the past year. This is quite good.
Measured over the past years, LULU shows a very strong growth in Revenue. The Revenue has been growing by 23.95% on average per year.
Based on estimates for the next years, LULU will show a quite strong growth in Earnings Per Share. The EPS will grow by 13.50% on average per year.
LULU is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 11.04% yearly.

Analyzing Health Metrics

To gauge a stock's financial health, ChartMill utilizes a Health Rating on a scale of 0 to 10. This comprehensive evaluation encompasses liquidity and solvency, both in absolute terms and in comparison to industry peers. NASDAQ:LULU has earned a 9 out of 10:

LULU has an Altman-Z score of 11.16. This indicates that LULU is financially healthy and has little risk of bankruptcy at the moment.
LULU has a better Altman-Z score (11.16) than 96.00% of its industry peers.
There is no outstanding debt for LULU. This means it has a Debt/Equity and Debt/FCF ratio of 0 and it is amongst the best of the sector and industry.
A Current Ratio of 2.43 indicates that LULU has no problem at all paying its short term obligations.

Understanding NASDAQ:LULU's Profitability

ChartMill employs its own Profitability Rating system for stock evaluation. This score, ranging from 0 to 10, is derived from an analysis of diverse profitability metrics and margins. In the case of NASDAQ:LULU, the assigned 9 is noteworthy for profitability:

LULU has a better Return On Assets (24.21%) than 96.00% of its industry peers.
With an excellent Return On Equity value of 40.49%, LULU belongs to the best of the industry, outperforming 96.00% of the companies in the same industry.
With an excellent Return On Invested Capital value of 29.51%, LULU belongs to the best of the industry, outperforming 96.00% of the companies in the same industry.
LULU had an Average Return On Invested Capital over the past 3 years of 27.36%. This is significantly above the industry average of 11.92%.
The last Return On Invested Capital (29.51%) for LULU is above the 3 year average (27.36%), which is a sign of increasing profitability.
Looking at the Profit Margin, with a value of 16.34%, LULU belongs to the top of the industry, outperforming 96.00% of the companies in the same industry.
LULU's Profit Margin has improved in the last couple of years.
With an excellent Operating Margin value of 23.02%, LULU belongs to the best of the industry, outperforming 98.00% of the companies in the same industry.
LULU has a better Gross Margin (58.54%) than 76.00% of its industry peers.

Why is NASDAQ:LULU a setup?

ChartMill also assign a Setup Rating to every stock. With this score it is determined to what extend the stock has been trading in a range in the recent days and weeks. This score also ranges from 0 to 10 and is updated daily. The setup score evaluates various short term technical indicators. NASDAQ:LULU scores a 8 out of 10:

Although the technical rating is bad, LULU does present a nice setup opportunity. Prices have been consolidating lately. There is a resistance zone just above the current price starting at 280.02. Right above this resistance zone may be a good entry point. There is a support zone below the current price at 270.90, a Stop Loss order could be placed below this zone. We notice that large players showed an interest for LULU in the last couple of days, which is a good sign. Very recently a Pocket Pivot signal was observed. This is another positive sign.

Every day, new Strong Growth stocks can be found on ChartMill in our Strong Growth screener.

For an up to date full fundamental analysis you can check the fundamental report of LULU

For an up to date full technical analysis you can check the technical report of LULU

Keep in mind

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.