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: lululemon athletica (Nasdaq: LULU) shareholders raised a glass of sweet, sweet profits-lemonade this morning and sent the shares up more than 17%, buoyed by boffo earnings that stomped Wall Street estimates and nearly doubled the company's year-ago haul.

So what: Reporting $0.36 per share earned, versus $0.20 earned last year, is clearly a "beat," but is it a "buy" signal? Noting the shares' pre-earnings run-up, Nomura Securities recently went on record saying the stock's valuation "does not make sense."

Now what: I suppose I see the logic in that. After all, LULU's now trading for nearly 49 times earnings -- a steep valuation, and more than twice what marquee Nike (NYSE: NKE) shares command. Then again, 49 times earnings is also the valuation at Under Armour (NYSE: UA), and most folks on Wall Street expect LULU to outgrow UA by better than 7 percentage points per year over the next five years. (Fool disclosure: I happen to think the valuation at UA really is crazy, and recently shorted the shares through the purchase of put options.)

I'd also point out that P/E is not the sum total of valuation perspectives. Price LULU on its free cash flow (which significantly outpaces reported earnings), and what you've got here is an enterprise valued at 32 times annual free cash flow, which is growing at more than 27% per year. Not an obvious bargain, I'll admit, but a heckuvalot cheaper than Under Armour. And, if lululemon keeps outgrowing analyst estimates, and that 27% growth prediction turns out to be conservative? Why, then it just might be a "buy."

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