Lululemon Athletica (NASDAQ: LULU) reached all-time-high $50 billion market cap last week, and a SimplyWall article is reporting that the company is a candidate to become a “10-bagger over a five-year period.” The article examines the company’s returns and analyzes whether the recent valuations are justified. After posting a notable Q2 earnings report highlighting revenue reaching $1.45 billion and year-over-year revenue growth of more than 60%, Lululemon saw impressive growth. The article noted that while CEO Calvin McDonald acknowledged that Lululemon benefited from the fact that many people were looking for more comfortable clothing during the COVID-19 pandemic, he also stated that the company was positioning itself to be a leader in the post-pandemic world. The company faces supply chain challenges as well as rising wage concerns; however, the article noted, “these challenges are so prevalent nowadays that they are barely a surprise. Furthermore, the company has no debt, and it has reduced the diluted shares outstanding by almost 7% in the last 5 years through stock buybacks. The company has used approximately half of the $500 million from the latest authorized buyback program. . . . In short, we’d argue Lululemon Athletica mandates those optimistic forecasts since it’s been able to compound its capital at very profitable rates of return. And the stock has done incredibly well with a 543% return over the last five years, so long-term investors are no doubt ecstatic with that result. So while investors may account for the positive underlying trends, we still think this stock is worth looking into further.”
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About Lululemon Athletica Inc.
Lululemon Athletica is a healthy-lifestyle-inspired athletic apparel company for yoga, running, training and most other sweaty pursuits, creating transformational products and experiences that enable people to live a life they love. Setting the bar in technical fabrics and functional designs, Lululemon works with yogis and athletes in local communities for continuous research and product feedback. For more information about the company, visit www.Lululemon.com.
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