Lululemon Athletica (LULU) Trading With Heavy Volume Before Market Open

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Lululemon Athletica ( LULU) as a pre-market mover with heavy volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Lululemon Athletica as such a stock due to the following factors:

  • LULU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $124.0 million.
  • LULU traded 329,431 shares today in the pre-market hours as of 7:55 AM, representing 10.3% of its average daily volume.

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More details on LULU:

lululemon athletica inc., together with its subsidiaries, designs, manufactures, and distributes athletic apparel and accessories for women, men, and female youth. It operates in three segments: Corporate-Owned Stores, Direct To Consumer, and Other. LULU has a PE ratio of 23.3. Currently there are 13 analysts that rate Lululemon Athletica a buy, 1 analyst rates it a sell, and 11 rate it a hold.

The average volume for Lululemon Athletica has been 3.0 million shares per day over the past 30 days. Lululemon has a market cap of $5.2 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 1.20 and a short float of 28.2% with 7.83 days to cover. Shares are down 22.9% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Lululemon Athletica as a hold. 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 expanding profit margins. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:
  • 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.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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