Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model. NEW YORK ( TheStreet) -- Lululemon Athletica (Nasdaq: LULU) has been reiterated by TheStreet Ratings as a buy with a ratings score of B. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.
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- The revenue growth came in higher than the industry average of 5.2%. Since the same quarter one year prior, revenues rose by 30.7%. Growth in the company's revenue appears to have helped boost 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 4.47, which clearly demonstrates the ability to cover short-term cash needs.
- LULULEMON ATHLETICA INC has improved earnings per share by 47.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, LULULEMON ATHLETICA INC increased its bottom line by earning $1.85 versus $1.27 in the prior year. This year, the market expects an improvement in earnings ($1.97 versus $1.85).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Textiles, Apparel & Luxury Goods industry average. The net income increased by 48.8% when compared to the same quarter one year prior, rising from $73.52 million to $109.38 million.
- The gross profit margin for LULULEMON ATHLETICA INC is rather high; currently it is at 59.00%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 22.52% significantly outperformed against the industry average.
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