Getting ready for the run!

22 ago

- LULU is getting ready for the reversal run!
- beaten down name YTD, cheapest valuation in a decade.
- international expansion will work out in the long run despite creating capex headwins in the shorter timeframe

5 set

Nota

- For LULU, Technicals were aligning but fundamentals haven't bottomed yet. Company is struggling with assortments mix i.e existing products are not refreshing enough for buyers.

- There could be more reasons for softness in demand in the US because of competition like ALO or consumer is actually weak and isn't spending hundreds for clothing.

- SIlverlining, their international expansion is working especially in China. I believe it's because LULU being an international brand has some brand value in Asia like china whereas American consumers have more option or their tastes have changed.

- For US consumers, they gotta experiment if giving discounts brings back customers if so then margin compression or if they refresh their product cycle which stimulate the demand organically.

5 set

Nota

- As for my fair value, my fair value where I wanted to originally add was a yellow line in the chart which is around $165

5 set

Nota

Financials for LULU

year | 2025 | 2026 | 2027 | 2028
EPS | 13.98 | 14.66 | 15.29 | 17.88
EPS% | -2.57% | 4.88% | 4.29% | 16.94%

For such a low eps growth but with some brand value. fair forward p/e is 10

Fair stock value:
year | 2025 | 2026 | 2027 | 2028
EPS | 13.98 | 14.66 | 15.29 | 17.88
price | 139 | 146 | 152 | 178

5 set

Nota

Does LULU have a turn around story?

- I would say yes, they gotta focus on capturing international markets so that their TAM remains huge and propeller of growth in the years ahead.

6 set

Nota

- If LULU C- suite is smart then they should consider buying back stock as much as they can. This will boost the EPS significantly and hopefully sustain 15% per year.

- In that scenario, we could assign a forward multiple of 15 and fair value becomes:

year | 2025 | 2026 | 2027 | 2028
EPS | 13.98 | 16 | 18.4 | 21.16
price | $209 | $240 | $276 | $317