Is This Your Chance to Buy Lululemon?

By Mark Reeth and Jason Moser – Sep 12, 2013 at 4:01PM

NASDAQ: LULU

Lululemon Athletica

Market Cap

$42B

Today's Change

(-0.41%) -$1.37

Current Price

$334.76

Price as of April 15, 2024, 4:00 p.m. ET

Shares of Lululemon are down today after the company’s earnings report -- should investors run for the hills, or get in now?

Shares of lululemon athletica (LULU -0.41%) are down more than 6% after the company announced earnings earlier today. Although revenue and same-store sales were both up, according to Motley Fool One Analyst Jason Moser, investors aren't happy that Lululemon lowered its estimates not only for the coming quarter, but for the whole year. That, combined with a high P/E ratio, makes Jason think that Lululemon had a decline coming. In addition, Jason thinks that some of today's decline could be attributed to the aftereffects of the company's yoga pants scandal and departure of its CEO, as well as problems with its supply chain.

So does today's decline make for a good entry point for intrepid investors? Jason doesn't think so; even though he likes the company, now may not be the time to buy, considering the strength of some of Lululemon's competitors like Nike (NKE 1.20%) and Under Armour (UAA).

Jason Moser owns shares of Under Armour and Nike. Mark Reeth has no position in any stocks mentioned. The Motley Fool recommends lululemon athletica, Nike, and Under Armour. The Motley Fool owns shares of Nike and Under Armour. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.