NEW YORK (TheStreet) -- Shares of Lululemon Athletica Inc. (LULU) are up 1.71% to $45.76 as the Vancouver-based technical athletic apparel company reportedly could be a takeover target, according to industry speculation, the Globe and Mail reports.
Analysts suggest that VF Corp. (VFC), which owns more than 30 brands such as North Face and 7 for all Mankind, could be a prime suitor.
Industry sources familiar with Lululemon said it's not for sale and it's not involved in talks to divest the company, the Globe and Mail noted.Must Read: Warren Buffett's 25 Favorite Growth Stocks
- Despite its growing revenue, the company underperformed as compared with the industry average of 14.7%. Since the same quarter one year prior, revenues slightly increased by 7.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- LULU has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 6.26, which clearly demonstrates the ability to cover short-term cash needs.
- Net operating cash flow has slightly increased to $183.53 million or 9.98% when compared to the same quarter last year. Despite an increase in cash flow of 9.98%, LULULEMON ATHLETICA INC is still growing at a significantly lower rate than the industry average of 87.76%.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Textiles, Apparel & Luxury Goods industry and the overall market, LULULEMON ATHLETICA INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- LULU's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 45.66%, which is also worse than the performance of the S&P 500 Index. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- You can view the full analysis from the report here: LULU Ratings Report
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