Lululemon Athletica (LULU) is the best S&P 500 stock Friday after the athleisure retailer beat top- and bottom-line expectations for its fiscal third quarter and raised its full-year outlook.
In the quarter ended October 27, Lululemon's revenue increased 8.7% year over year to $2.4 billion, driven by a 33% surge in international revenue. Its earnings per share (EPS) were up 13.4% from the year-ago period to $2.87.
"Our performance in the third quarter shows the enduring strength of Lululemon globally, as we saw continued momentum across our international markets and in Canada," said Lululemon CEO Calvin McDonald in a statement. "Looking to the future, we are pleased with the start to our holiday season, and we remain focused on accelerating our U.S. business and growing our brand awareness around the world."
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The results beat analysts' expectations. Wall Street was anticipating revenue of $2.36 billion and earnings of $2.69 per share, according to CNBC.
As a result of its strong performance in the third quarter, Lululemon raised its full-year outlook. Here's what the company now expects to accomplish in its fiscal year compared to its previous forecast:
| Metric | Updated outlook | Prior outlook |
|---|---|---|
| Revenue | $10.452 billion to $10.487 billion | $10.375 billion to $10.475 billion |
| Earnings per share | $14.08 to $14.16 | $13.95 to $14.15 |
The new outlook came in ahead of analysts' expectations. Specifically, Wall Street is forecasting revenue of $14.44 billion and earnings of $13.97 per share.
For its fiscal fourth quarter, Lululemon said it anticipates revenue in the range of $3.475 billion to $3.51 billion and earnings per share of $5.56 to $5.64. Analysts are guiding for revenue of $3.5 billion and earnings of $5.59 per share.
Is Lululemon stock a buy, sell or hold?
Lululemon had a rough start to 2024, but shares bottomed over the summer and have been trending higher since. And Wall Street thinks brighter days are in store for the consumer discretionary stock. According to S&P Global Market Intelligence, the consensus recommendation among the 36 covering analysts it tracks is a Buy.
However, analysts' price targets have failed to keep up with the recent surge in LULU’s stock. Indeed, shares are up nearly 16% today and more than 70% since August 1. The average price target of $356.38 sits at a discount to current trading levels which could prompt some price-target hikes if the retail stock's rally continues.
William Blair analyst Sharon Zackfia is one of those with an Outperform (Buy) rating on Lululemon "given the strength of the brand, international momentum, and significant opportunity to grow domestic brand awareness."
The analyst says that "efficiencies and benefits from changes to its product organization to better balance design and merchandising" have Lululemon "on track to return to historical levels of product freshness no later than spring 2025." She also calls the company's fourth-quarter guidance "conservative" and "beatable."
Related Content
- Analysts' Top S&P 500 Stocks to Buy Now
- Earnings Calendar and Analysis
- Why Analysts Say Five Below Is a Buy After Earnings
-
Stock Market Winners and Losers of the 'Big, Beautiful' BillDefense, manufacturing and tech should prosper, while health care and green energy stocks face hurdles.
-
I'm a Financial Planner: Here's How to Invest Like the Wealthy, Even if You Don't Have MillionsPrivate market investments, once exclusive to the ultra-wealthy and institutions, have become more accessible to individual investors, thanks to regulatory changes and new investment structures.
-
Four Ways a Massive Emergency Fund Can Hurt You More Than It HelpsSaving too much could mean you're missing opportunities to put your money to work. Redirect some of that money toward paying off debt, building retirement funds, fulfilling a dream or investing in higher-growth options.
-
With Buffett Retiring, Should You Invest in a Berkshire Copycat?Warren Buffett will step down at the end of this year. Should you explore one of a handful of Berkshire Hathaway clones or copycat funds?
-
I'm a Financial Planner: How to Dodge a Retirement Danger You May Not Have Heard AboutTiming is everything, and sequence of returns risk can mean the difference between a retirement nest egg that's overflowing … or empty.
-
Caring for Aging Parents: An Expert Guide to Easing the Financial and Emotional StrainEarly conversations, financial planning and understanding the progression of care needs can help to mitigate stress and protect family relationships.
-
Dow Adds 238 Points as UNH, CAT Pop: Stock Market TodayThe lack of a September jobs report didn't seem to worry market participants, with the data delayed due to the ongoing government shutdown.
-
I'm a Financial Adviser: The OBBB Is a Reminder for Older People to Have a Long-Term PlanThe new tax bill presents a good opportunity for retirees to revisit tax plans, look into doing some Roth conversions and consider plans for long-term care.
