Investigating Lululemon Athletica's Standing In Textiles, Apparel & Luxury Goods Industry Compared To Competitors

In the fast-paced and highly competitive business world of today, conducting thorough company analysis is essential for investors and industry observers. In this article, we will conduct an extensive industry comparison, evaluating Lululemon Athletica (NASDAQ:LULU) in relation to its major competitors in the Textiles, Apparel & Luxury Goods industry. Through a detailed examination of key financial metrics, market standing, and growth prospects, our objective is to provide valuable insights and illuminate 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 700 company-owned stores in about 20 countries, e-commerce, outlets, and wholesale accounts. The company was founded in 1998 and is based in Vancouver, Canada.

After a detailed analysis of Lululemon Athletica, the following trends become apparent:

• At 22.87, the stock's Price to Earnings ratio is 0.93x less than the industry average, suggesting favorable growth potential.

• It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 8.44 which exceeds the industry average by 3.14x.

• With a relatively high Price to Sales ratio of 3.68, which is 3.44x the industry average, the stock might be considered overvalued based on sales performance.

• The Return on Equity (ROE) of 7.61% is 4.74% above the industry average, highlighting efficient use of equity to generate profits.

• The company exhibits higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $530 Million, which is 6.62x above the industry average, implying stronger profitability and robust cash flow generation.

• Compared to its industry, the company has higher gross profit of $1.28 Billion, which indicates 2.91x above the industry average, indicating stronger profitability and higher earnings from its core operations.

• With a revenue growth of 10.4%, which surpasses the industry average of -1.07%, the company is demonstrating robust sales expansion and gaining market share.

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.

By analyzing Lululemon Athletica in relation to its top 4 peers based on the Debt-to-Equity ratio, the following insights can be derived:

• In terms of the debt-to-equity ratio, Lululemon Athletica has a lower level of debt compared to its top 4 peers, indicating a stronger financial position.

• This implies that the company relies less on debt financing and has a more favorable balance between debt and equity with a lower debt-to-equity ratio of 0.33.

Key Takeaways

For Lululemon Athletica in the Textiles, Apparel & Luxury Goods industry, the PE ratio is low compared to peers, indicating potential undervaluation. The high PB and PS ratios suggest the stock may be overvalued based on its assets and sales. In terms of performance, Lululemon shows high ROE, EBITDA, gross profit, and revenue growth, reflecting strong profitability and growth potential relative to industry competitors.

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