lululemon athletica Shares Surged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of yoga and fitness apparel designer lululemon athletica (Nasdaq: LULU  ) were stretching to the sky today, gaining as much as 16% in intraday trading after the company boosted its profit outlook.

So what: What's not to like when a company says that it made more profit than expected? For the fiscal fourth quarter -- which ends Jan. 29 -- Lululemon now expects that it will earn $0.47 to $0.49 per share on revenue of $358 million to $363 million. At the midpoint of the profit range, that is a 17% boost over the company's previous guidance. In its press release, CEO Christine Day noted that holiday sales were strong, but that the snappy sales performance is continuing as the company pushes its spring attire.

Now what: For growth investors -- like my fellow Fools at Motley Fool Rule Breakers, who have recommended that subscribers buy Lululemon -- today's report is a confirmation of exactly why investors have been so excited about this company. It's a high-growth story with fat margins and impressive profits, and it has a habit for defying critics. This most recent forecast boost is just another notch in the company's already-well-marked belt.

That said, for a value-investing curmudgeon like myself, while the growth at Lululemon is impressive, the valuation multiples that investors need to pay to own the stock are far less appetizing.

Want to keep up to date on Lululemon? Add it to your watchlist.

The Motley Fool owns shares of Lululemon Athletica. Motley Fool newsletter services have recommended buying shares of Lululemon Athletica. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Fool contributor Matt Koppenheffer does not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.


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