lululemon athletica inc. (LULU) Stock Analysis
lululemon athletica inc. (LULU) Stock Analysis
Analysis from 10-Q filed 2025-12-11. Data as of Q1 2026.
Overall Grade: F (Concerning)
lululemon athletica inc. faces challenges in financial performance that warrant careful analysis.
| Metric | Value | Context |
|---|---|---|
| ROIC | 27.2% | Above industry average |
| FCF Margin | 8.3% | Healthy cash flow |
| Debt/Equity | 0.0x | Conservative leverage |
Investment Thesis: Strong return on invested capital of 27.2% suggests durable competitive advantages and efficient capital allocation.
Explore lululemon athletica inc.: Earnings History | Filing Intelligence | ROIC Analysis
Profitability: lululemon athletica inc. earns 27.2% ROIC, Top 5% in Industrials
lululemon athletica inc.'s trailing-twelve-month ROIC of 27.2% ranks Top 5% in Industrials companies (sector median: 7.3%), driven by NOPAT margin of 14.0% combined with asset turnover of 1.4x. Source: 10-Q filed 2025-12-11. Gross margin of 56.6% with operating margin at 19.9% reflects strong pricing power.
| Metric | LULU | Rating | Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 27.2% | Excellent | Above sector median of 7.3% |
| Return on Equity (ROE) | 35.4% | Excellent | Efficient use of shareholder equity |
| Gross Margin | 56.6% | Excellent | Strong pricing power |
| Operating Margin | 19.9% | Good | Efficient operations |
Cash Flow: lululemon athletica inc. generates $921.7M FCF at 8.3% margin, positive NaN/8 quarters
lululemon athletica inc. generated $921.7M in free cash flow (TTM), a 8.3% FCF margin, a margin that ranks Top 50% in Industrials. Operating cash flow exceeds net income by 1.0x, indicating high earnings quality. FCF was positive in N/A of the last 8 quarters. Source: 10-Q filed 2025-12-11.
| Metric | LULU | Rating | Context |
|---|---|---|---|
| Free Cash Flow Margin | 8.3% | Adequate | Healthy cash generation |
| Free Cash Flow (TTM) | $921.7M | Good | Positive cash generation |
| OCF/Net Income | 1.0x | Excellent | High earnings quality |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
Balance Sheet: lululemon athletica inc. at 0.0x leverage
lululemon athletica inc.'s debt-to-equity ratio of 0.0x reflects conservative leverage. Source: 10-Q filed 2025-12-11.
| Metric | LULU | Rating | Context |
|---|---|---|---|
| Debt to Equity | 0.0x | Excellent | Conservative capital structure |
Valuation: lululemon athletica inc. trades at 13.1x earnings
lululemon athletica inc. trades at a P/E of 13.1x. Free cash flow yield of 4.4% reflects market expectations for growth.
| Metric | LULU | Rating | Context |
|---|---|---|---|
| P/E Ratio | 13.1x | Adequate | Reasonable valuation |
| EV/Sales | 1.7x | Excellent | Attractive revenue multiple |
| FCF Yield | 4.4% | Good | Lower cash yield |
Capital Allocation: lululemon athletica inc. returns 5.7% shareholder yield
lululemon athletica inc.'s total shareholder yield is 5.7% (dividends + buybacks 5.7%). Source: 10-Q filed 2025-12-11.
| Metric | LULU | Rating | Context |
|---|---|---|---|
| Total Shareholder Yield | 5.7% | Good | Dividend + buyback yield combined |
| Buyback Yield | 5.7% | Good | Active share repurchases |
| Total Capital Returned (TTM) | $1.2B | Good | Dividends + buybacks returned to shareholders |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 27.2% | Top 5% | 3.7x above |
| Free Cash Flow Margin | 8.3% | Top 50% | 1.8x above |
| Gross Margin | 56.6% | Top 25% | 1.7x above |
| Operating Margin | 19.9% | Top 25% | 2.6x above |
| Return on Equity (ROE) | 35.4% | Top 5% | 4.1x above |
| P/E Ratio | 13.1x | N/A | - |
Financial Scorecard
| Metric | LULU | Rating | Sector Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 27.2% | Excellent | Top 5% of sector (median: 7.3%) |
| Free Cash Flow Margin | 8.3% | Adequate | Top 50% of sector (median: 4.7%) |
| Gross Margin | 56.6% | Excellent | Top 25% of sector (median: 33.1%) |
| Debt to Equity Ratio | 0.0% | Excellent | Conservative capital structure |
| P/E Ratio (Price-to-Earnings) | 13.1x | Adequate | Attractively valued |
| Free Cash Flow Yield | 4.4% | Adequate | Moderate yield |
Frequently Asked Questions
Q: What is lululemon athletica inc.'s Return on Invested Capital (ROIC)?
lululemon athletica inc. (LULU) has a trailing twelve-month Return on Invested Capital (ROIC) of 27.2%. This compares above the sector median of 7.3%. An ROIC above 20% indicates exceptional capital efficiency and strong competitive advantages.
Q: What is lululemon athletica inc.'s Free Cash Flow Margin?
lululemon athletica inc. (LULU) has a free cash flow margin of 8.3%, generating $921.7 million in free cash flow over the trailing twelve months. A FCF margin between 5-10% is typical for capital-intensive businesses.
Q: Is lululemon athletica inc. stock overvalued or undervalued?
lululemon athletica inc. (LULU) trades at a P/E ratio of 13.1x, which is above the sector median of N/A. The EV/Sales multiple is 1.7x. Free cash flow yield is 4.4%, which is in line with market averages.
Q: What is lululemon athletica inc.'s revenue and earnings growth?
lululemon athletica inc. (LULU) grew revenue by 4.9% year-over-year. Earnings per share decreased by 9.5% compared to the prior year. Modest growth indicates a mature business with stable demand.
Q: Is lululemon athletica inc. buying back stock?
lululemon athletica inc. (LULU) repurchased $1.2 billion of stock over the trailing twelve months. This represents a buyback yield of 5.7%.
Q: How does lululemon athletica inc. compare to competitors in Industrials?
Compared to other companies in Industrials, lululemon athletica inc. (LULU) shows: ROIC of 27.2% is above the sector median of 7.3% (Top 0%). FCF margin of 8.3% exceeds the sector median of 4.7% (Top 35% of sector). Gross margin at 56.6% is 23.5 percentage points higher than sector peers. These rankings are based on MetricDuck's analysis of all Industrials companies with available SEC filings.
Q: What warning signs should I watch for with lululemon athletica inc.?
lululemon athletica inc. (LULU) shows no major financial warning signs based on current metrics. However, investors should always monitor: 1) Margin compression trends, 2) Cash flow consistency, 3) Debt levels relative to cash generation, and 4) Changes in competitive positioning.
Data Source: Data sourced from 10-Q filed 2025-12-11. TTM metrics as of Q1 2026.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
Scope: This analysis covers SEC filing fundamentals — profitability, cash flow, balance sheet, and valuation metrics. For analyst estimates and price targets, consult sell-side research.
This analysis is for informational purposes only and does not constitute investment advice.