Lululemon continues to flex its energy; Website visits hinted at it

Lululemon Athletica Inc. (LULU), a Canadian sportswear and lifestyle retailer, is gaining momentum. The company again impressed its investors with outstanding results in the fourth quarter.

Surprisingly, the new monthly website visits metric from TipRanks already indicated that Lululemon would generate strong Q4 revenue.

Lululemon’s fourth-quarter revenue was $2.1 billion, up 23% year-over-year. Same-store sales and net direct-to-consumer revenue, in particular, rose 32% and 17%, respectively, acting as tailwinds.

The ability to reveal a website’s estimated total traffic even before the results are published is one of the most useful features of the new tool. Statistics from lululemon.com revealed a clear upward trend.

Specifically, the graph below indicates that the total number of expected visitors to the lululemon.com website increased 33.2% sequentially to 31.2 million in the fourth quarter.

Other points worth mentioning

Along with impressive revenue growth, Lululemon reported EPS of $3.37 per share, up 30.6% year-over-year and beating consensus guidance of $3.27.

Additionally, the company gave a positive outlook, which is a crucial part of retaining investors these days. Lululemon expects first-quarter revenue of $1.525 billion to $1.55 billion, which is better than analysts’ forecast of $1.4 billion. Meanwhile, EPS is expected to range between $1.38 and $1.43, versus a consensus estimate of $1.29.

The authorization of a new share buyback program was another positive point of the quarter. The company’s board approved a new share buyback program worth up to $1 billion, which pleased shareholders.

Expert’s commentary

Following the fourth quarter print, most analysts were bullish on the stock. Guggenheim analyst Robert Drbul is one such analyst who expects supply chain headwinds in the first quarter but sees plenty of reason for optimism.

In his recent report, he wrote, “We are encouraged by the continued strength of LULU’s overall product portfolio and expect the brand to deliver strong results throughout fiscal 22E as the active/casual and health/wellness tendencies remain firmly intact.

According to Drbul, Lululemon’s strong global presence should support “solid revenue growth” and “structurally higher operating margins” in the near future.

To that end, he maintained a Buy rating on Lululemon with a price target of $475.

The Taking of Wall Street

Wall Street analysts are cautiously bullish on Lululemon, with a Moderate Buy consensus rating based on 17 buys, seven holds and one sell. The average Lululemon stock forecast of $422.00 implies an upside potential of around 12% from current levels for this stock.

At the end of the line

Lululemon appears to be a fundamentally sound company that should continue to grow revenue and bottom line as innovative new products inspire consumers to adopt healthy lifestyles and help the company expand into new markets.

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About William G. Patrick

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