Evaluating Lululemon Athletica Against Peers In Textiles, Apparel & Luxury Goods Industry

In the fast-paced and cutthroat world of business, conducting thorough company analysis is essential for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating Lululemon Athletica LULU in comparison to its major competitors within the Textiles, Apparel & Luxury Goods industry. By analyzing crucial financial metrics, market position, and growth potential, our objective is to provide valuable insights for investors and offer a deeper understanding of company's performance in the industry.

Lululemon Athletica Background

Lululemon Athletica designs, distributes, and markets athletic apparel, footwear, and accessories for women, men, and girls. Lululemon offers pants, shorts, tops, and jackets for both leisure and athletic activities such as yoga and running. The company also sells fitness accessories, such as bags, yoga mats, and equipment. Lululemon sells its products through more than 680 company-owned stores in 19 countries, e-commerce, outlets, and wholesale accounts. The company was founded in 1998 and is based in Vancouver, Canada.

By carefully studying Lululemon Athletica, we can deduce the following trends:

• The current Price to Earnings ratio of 58.38 is 2.67x higher than the industry average, indicating the stock is priced at a premium level according to the market sentiment.

• The elevated Price to Book ratio of 16.42 relative to the industry average by 5.3x suggests company might be overvalued based on its book value.

• The stock's relatively high Price to Sales ratio of 6.36, surpassing the industry average by 5.39x, may indicate an aspect of overvaluation in terms of sales performance.

• The Return on Equity (ROE) of 7.05% is 0.91% above the industry average, highlighting efficient use of equity to generate profits.

• The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $510 Million is 3.4x above the industry average, highlighting stronger profitability and robust cash flow generation.

• Compared to its industry, the company has higher gross profit of $1.26 Billion, which indicates 2.14x above the industry average, indicating stronger profitability and higher earnings from its core operations.

• The company's revenue growth of 18.7% is notably higher compared to the industry average of 2.11%, showcasing exceptional sales performance and strong demand for its products or services.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio measures the financial leverage of a company by evaluating its debt relative to its equity.

Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.

In terms of the Debt-to-Equity ratio, Lululemon Athletica stands in comparison with its top 4 peers, leading to the following comparisons:

• Among its top 4 peers, Lululemon Athletica has a stronger financial position with a lower debt-to-equity ratio of 0.33.

• This indicates that the company relies less on debt financing and maintains a more favorable balance between debt and equity, which can be viewed positively by investors.

Key Takeaways

For Lululemon Athletica in the Textiles, Apparel & Luxury Goods industry, the PE, PB, and PS ratios are all high compared to its peers, indicating a potentially overvalued stock. On the other hand, the high ROE, EBITDA, gross profit, and revenue growth suggest strong financial performance and growth potential relative to industry competitors.

This article was generated by Benzinga's automated content engine and reviewed by an editor.