Key Takeaways
- Quality scores 78/100, with a 30.9% return on equity, 54.9% gross margin and $1.1B of free cash flow against roughly $1.4B of implied net income.
- Growth is the concern: revenue fell 4.3% (TTM) after an 11.0% 5-year CAGR, and earnings growth was -5.9% (TTM).
- Opportunity scores 95/100 on a P/E of 8.69 and a 9.4% FCF yield, with the price at the lower end of its $94.46 to $414.20 two-year range.
A P/E of 8.69 for a company with a 30.9% return on equity is unusual, and it is the reason this lululemon athletica inc. stock analysis lands on a Buy signal. The catch is that revenue is shrinking, which is likely why the market has marked the shares down so far.
What Is Happening With the Stock Price
lululemon trades at $105.60, with a market cap of $12.23B. Its two-year range runs from a low of $94.46 to a high of $414.20, so the shares sit at the lower end of the range, just above the two-year low and a long way below the two-year high. A fall of that scale signals deep pessimism about the company’s growth outlook, and it can persist if results keep disappointing.
Quality: Is This a Financially Sound Business?
Quality scores 78 out of 100. Gross margin is 54.9%, operating margin is 13.2% and net profit margin is 12.8%, with earnings per share of $12.15. Return on equity is 30.9% and return on assets is 14.4%, both strong. Cash flow supports the earnings: net income implied by the margin is roughly $1.4B, and free cash flow is $1.1B, a healthy conversion if not a full match. The balance sheet is conservative, with debt-to-equity of 0.45, a current ratio of 2.19 and a quick ratio of 0.87, which reflects inventory-heavy working capital. This lululemon athletica inc. stock analysis finds the core business financially sound.
Growth: Does This Company Have Real Upside?
Growth is the weak pillar, scoring 42 out of 100. Revenue declined 4.3% on a trailing-twelve-month basis, a sharp change from the 11.0% five-year CAGR. Earnings growth was -5.9% (TTM), so profit is slipping too, though more slowly than sales would suggest. A 54.9% gross margin shows the brand still commands pricing power, and EV/Revenue of 1.11 is low, meaning the market is paying little for each dollar of sales. The key question is whether the revenue decline is temporary or the start of a longer slowdown.
Opportunity: Is Now a Good Time to Enter?
Opportunity scores 95 out of 100, the strongest pillar. A P/E of 8.69, EV/EBITDA of 5.17, price-to-book of 2.46 and an FCF yield of 9.4% all point to a valuation that is low relative to the company’s profitability. With the price at the lower end of its two-year range, the setup is contrarian: the market is pricing in continued decline. The bear case is that cheap stocks can stay cheap, or get cheaper, if revenue keeps falling and the multiples reflect a lasting loss of growth rather than a temporary dip.
lululemon athletica inc. Stock Analysis: The Bottom Line
Quality of 78, Growth of 42 and Opportunity of 95 produce a recommendation score of 72 out of 100, which the model reads as a Buy signal. Strong margins, solid cash generation and a low valuation outweigh shrinking sales in the model’s view, but the revenue trend is the main risk to watch. Buy / Hold / Sell reflects StreetBriefs’ quantitative scoring model (Quality, Growth, Opportunity), a data-driven signal for further research, not a personalized recommendation to transact.
Financial Metrics Summary
| Metric | Value |
|---|---|
| Price & Valuation | |
| Current Price | $105.60 |
| 2-Year Low | $94.46 |
| 2-Year High | $414.20 |
| Market Cap | $12.23B |
| P/E Ratio | 8.69 |
| EV / Revenue | 1.11 |
| Our Scores | |
| Quality Score | 78 / 100 |
| Growth Score | 42 / 100 |
| Opportunity Score | 95 / 100 |
| Profitability | |
| Earnings Per Share | $12.15 |
| Return on Assets | 14.4% |
| Return on Equity | 30.9% |
| Net Profit Margin | 12.8% |
| Gross Margin | 54.9% |
| Operating Margin | 13.2% |
| Growth | |
| Revenue Growth (5Y CAGR) | 11.0% |
| Revenue Growth (TTM) | -4.3% |
| Earnings Growth (TTM) | -5.9% |
| Balance Sheet | |
| Debt-to-Equity | 0.45 |
| Current Ratio | 2.19 |
| Quick Ratio | 0.87 |
| Income & Dividends | |
| Dividend Yield | 0.0% |
| Payout Ratio | 0.0% |
Data as of October 29, 2026
Our Three-Pillar Assessment
| Quality |
78/100 |
| Growth |
42/100 |
| Opportunity |
95/100 |
Quality measures business fundamentals: profitability, cash flow discipline, and balance sheet strength.
Growth captures revenue momentum, gross margin scalability, and the Rule of 40 efficiency test.
Opportunity signals entry timing: current valuation versus history and price position in the 2-year range.
Current price: $105.60 trading 75% below its 2-year high of $414.20.
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This analysis is done using financial data from Yahoo Finance.
Always conduct your own due diligence and consult a qualified financial advisor before making investment decisions.
