Lululemon Athletica inc. (LULU): Billionaire Stephen Mandel Was Buying

Peers for Lululemon Athletica inc. (NASDAQ:LULU) include NIKE, Inc. (NYSE:NKE), Under Armour Inc (NYSE:UA), Gildan Activewear Inc (USA) (NYSE:GIL), and Columbia Sportswear Company (NASDAQ:COLM). Most of these comparable companies (the exception being Under Armour Inc (NYSE:UA)) post trailing earnings multiples in the 20-23 range, which while still aggressive valuations are significant discounts to Lululemon Athletica inc. (NASDAQ:LULU). Of course, the principal driver of this gap is lululemon’s higher growth rates: in its most recent quarter, Nike’s revenue grew only 9% compared to the same period in the previous fiscal year while Columbia Sportswear Company (NASDAQ:COLM) actually experienced a decline in sales (we’d note that Columbia is another popular short target). NIKE, Inc. (NYSE:NKE), however, has been reporting higher net income numbers and could be worth a look. Gildan Activewear Inc (USA) (NYSE:GIL)’s revenue numbers have been quite strong, and analyst expectations imply a forward P/E of only 13. If it hits those targets, then the stock might qualify for “growth at a reasonable price.” That leaves Under Armour, which is quite similar to lululemon in terms of its financials and valuation: the trailing and forward P/Es are 47 and 31, respectively. Revenue numbers in its last quarterly report compared to the fourth quarter of 2011 were about even with what lululemon experienced, and earnings growth was close to 50% as well. 19% of Under Armour’s float is held short.

Under Armour and lululemon seem too dependent on future earnings growth for us to recommend buying- at their present valuation current growth rates would have to continue for several years. Gildan appears to be the most likely value prospect, though even there the company may be a bit speculative as the trailing earnings multiple is not particularly low and any value case is rooted in the business meeting analyst expectations over the next two years.

Disclosure: I own no shares of any stocks mentioned in this article.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!