Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, yoga gear retailer lululemon athletica (Nasdaq: LULU ) has received a distressing two-star ranking.
With that in mind, let's take a closer look at Lululemon's business and see what CAPS investors are saying about the stock right now.
Lululemon facts
| Headquarters (Founded) |
Vancouver, Canada (1998) |
| Market Cap |
$9.3 billion |
| Industry |
Apparel |
| Trailing-12-Month Revenue |
$874.7 million |
| Management |
CEO Christine Day (since 2008)
CFO John Currie (since 2007) |
| Return on Equity (Average, Past 3 Years) |
33.4% |
| Cash/Debt |
$277.0 million / $0 |
| Competitors |
Adidas AG
Nike
Under Armour |
Sources: S&P Capital IQ and Motley Fool CAPS.
On CAPS, 26% of the 1,224 members who have rated Lululemon believe the stock will underperform the S&P 500 going forward.
Earlier this week, one of those Fools, All-Star MOSCapital, nicely summed up the Lululemon bear case for our community:
They have certainly grown their potential, but it would be a little dubious to say that a maker of athletic wear who really has no other competitive moat besides the fact that people know their name, and that they are obviously the largest fitness apparel company focusing on the yoga/pilates/etc. trend, is worth this much. ...
Those who are going to buy from lululemon most likely already have, and could certainly stay loyal, but realistically how much room is there for customer growth? This is not a company who is worth almost 60 times earnings. It may still be worth higher than a mature company, given that it still might have a little growing to do, but even a 20 times earnings multiple puts this company at closer to $20-$25. And who knows if that is even worth it if other companies come in and steal market share.
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