NEW YORK (TheStreet) -- Lululemon Athletica (LULU) - Get Lululemon Athletica Inc Report stock is rising by 4.83% to $51.66 in mid-afternoon trading on Monday, amid rumors that the company might be in talks to be acquired by fellow athletic wear retailer Under Armour (UA).
Under Armour has been trying to grow its women's clothing business, according to the New York Post. Under Armour told the Post it does not comment on rumors, while Lululemon did not return the publication's calls.
Additionally, shares of Lululemon were boosted by 4% on Friday after Bloomberg Gadfly suggested that Nike should spend $7.5 billion on Lululemon instead of $12 billion in share repurchases, as planned, the New York Post reports.
Based in Vancouver, Lululemon is a designer and retailer of technical athletic apparel.
Separately, TheStreet Ratings team rates LULULEMON ATHLETICA INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
We rate LULULEMON ATHLETICA INC (LULU) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and weak operating cash flow.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- LULU's revenue growth has slightly outpaced the industry average of 15.4%. Since the same quarter one year prior, revenues rose by 15.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the 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 3.74, which clearly demonstrates the ability to cover short-term cash needs.
- After a year of stock price fluctuations, the net result is that LULU's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed compared to the Textiles, Apparel & Luxury Goods industry average, but is greater than that of the S&P 500. The net income has decreased by 2.2% when compared to the same quarter one year ago, dropping from $48.75 million to $47.67 million.
- Net operating cash flow has significantly decreased to $11.22 million or 78.83% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: LULU
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.