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.