Has LULU Quietly Become a Value Play?

Here is why we think Lululemon Athletica (LULU) deserves consideration as a value stock. It is currently trading nearly 58% below its 1 year high, and also trading at a PS multiple which is below the average for the last 3 years. However, it has reasonable fundamentals for its level of valuation.

• Reasonable Revenue Growth: 9.2% LTM and 15.8% last 3 year average.
• Cash Generative: Nearly 10.7% free cash flow margin and 22.9% operating margin LTM.
• No Major Margin Shocks: LULU has avoided any large margin collapse in the last 12 months.
• Modest Valuation: Despite encouraging fundamentals, LULU trades at a PE multiple of 11.9
• Opportunity vs S&P: Compared to S&P, you get lower valuation, higher revenue growth, and better operating margins

As a quick background, Lululemon Athletica provides athletic apparel and accessories for women and men through company-operated stores and direct-to-consumer channels across multiple countries worldwide.

*LTM: Last Twelve Months

But do these numbers tell the full story? Read Buy or Sell LULU Stock to see if Lululemon Athletica still has an edge that holds up under the hood.

That is one way to look at stocks. Trefis High Quality Portfolio evaluates much more, and is designed to reduce stock-specific risk while giving upside exposure

Stocks Like These Can Outperform. Here Is Data

Below are statistics for stocks with same selection strategy applied between 12/31/2016 and 6/30/2025.

• Average 6-month and 12-month forward returns of 12.7% and 25.8% respectively
• Win rate (percentage of picks returning positive) of > 70% for both 6-month and 12-month periods
• Not over dependent on market crashes. During non-crash periods as well, this strategy has 12-month average return of nearly 20% with 67% win rate.

But Consider The Risk

That said, Lululemon isn’t immune to big drops. It fell nearly 92% during the Global Financial Crisis, which is a huge hit. More recently, the 2018 correction cut it by about 31%, and the Covid pandemic hit around 47%. Even the inflation shock in 2022 dragged it down roughly 46%. These numbers show that no matter how strong the fundamentals, Lululemon can take big hits when markets sell off hard. Risk is always there.

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read LULU Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.