Knowing facts before you bet on it

Lululemon (Lulu) is one of the stocks that have recently been observed by Zacks.com visitors. So it could be a good idea to check some of the factors that could influence the short -term performance of the share.

Last month, the shares of this sports clothing manufacturer +21.5% returned, compared to the changes in the Zack S&P 500 Composite +9.9%. During this time, the Zack's textile – clothing industry in which Lululemon falls has increased 22.1%. The key question now is: What could be the future direction of the stock?

Although media reports or rumors about a significant change in the business prospects of a company generally lead to the fact that its shares lead to trend and an immediate change in price, there are always certain basic factors that ultimately advance the purchase and hate decision.

Instead of concentrating on anything else, we prioritize the evaluation of the change in the profit projection of a company at Zacks. This is due to the fact that we believe that the current value for its shares is determined by the cash value of his future profit current.

Our analysis essentially is based on how the analysts of sales pages that cover the shares revises their profit estimates in order to take into account the latest business trends. If the profit estimates for a company increase, the at the time to be accompanied by the current value for its shares. And if the at the time value of a share to be added is higher than the current market price, investors tend to buy the shares, which means that the price is upwards. For this reason, empirical studies indicate a strong correlation between trends in estimating the profits and the short -term share price movements.

Lululemon is expected to make a profit of $ 2.60 per share in the current quarter, which corresponds to a change of +2.4%compared to the previous year. In the last 30 days, the Zacks consensus estimate remained unchanged.

For the current financial year, the consensus estimate of $ 14.91 refers to a change of +1.8% compared to the previous year. This estimate has remained unchanged in the past 30 days.

For the next financial year, the consensus estimate of $ 16.41 shows a change of +10.1% compared to what Lululemon is expected a year ago. The estimate remained unchanged last month.

With an impressive external, tested success balance sheet is our proprietary stock assessment tool and the Zacks-rank-rank-a more cozy indicator for the short-term price-performance of a share, since it effectively uses the power of the profit assessment revisions. The size of the recent change in the consensus estimate and three other factors in connection with earnings estimates led to a Zacks rank #3 (Hold) for Lululemon.

The following table shows the development of the company's 12-month consensus EPS EPS estimate:

12-month consensus EPS estimate for Lulu _12monthepScharturl

While profit growth is probably the most superior indicator of a company's financial health, nothing happens than such if a company cannot increase its income. After all, it is almost impossible for a company to increase its income over a longer period of time without increasing its income. It is therefore important to know the potential sales growth of a company.

In the case of Lululemon, the consensus sales estimate of $ 2.35 billion for the current quarter refers to a change of +6.6%compared to the previous year. The estimates of $ 11.19 billion and $ 12.12 billion for the current and next financial years show changes of +5.7% or +8.3%.

Lululemon reported sales of $ 3.61 billion in the last quarter, which corresponds to a change of +12.7%compared to the previous year. EPS of $ 6.14 for the same period comparable to $ 5.29 a year ago.

Compared to the Zacks Consensus estimate of 3.58 billion US dollars, the registered income is a surprise of +0.9%. The EPS surprise was +4.96%.

The company defeated consensus -epseps estimates in each of the following four quarters. The company has achieved three times consensus sales estimates three times during this period.

Without taking into account the assessment of a share, no investment decision can be efficient. When predicting the future price performance of a share, it is crucial to determine whether the current price correctly reflects the internal value of the underlying business and the company's growth prospects.

During the comparison of the current values of the evaluation advantages of a company, such as price-to-profit (P/E), Price-to-Sales (P/S) and Price-to-Cash-Flow (P/CF), with its own historical values, to determine whether its shares are rather evaluated, overvalued or undervalued, the relative position is comparable to prices for the relative position.

The Zacks Value Style Score (part of the Zacks Style Scores Systems), which pays attention to the grade of stocks from A to F both traditional and unconventional valuation metrics (AA is better than a C; and so on) is rather helpful to identify whether a share is overrated, legally valued or temporarily accommodated.

Lululemon is evaluated on this Front D, which indicates that it deals with his colleagues with a bonus. Click here to display the values of some evaluation metrics that have driven this grade.

The facts discussed here and a lot of other information about Zacks.com could help determine whether it is worth paying attention to the Lululemon market or not. However, the Zacks ranked 3rd indicate that it is in line with the broader market at short notice.

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Lululemon Athletica Inc. (Lulu): Report for free stock analysis

This article was originally published in Zack's Investment Research (Zacks.com).

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