NEW YORK (TheStreet) -- Lululemon Athletica (LULU) stock is rising by 6.50% to $58.29 in after-hours trading on Monday, after the company increased its fiscal 2015 fourth quarter earnings and revenue guidance this afternoon.
The athletic apparel retailer now expects fourth quarter revenue to range between $690 million and $695 million, compared to the previously expected range between $670 million and $685 million.
Diluted earnings should range between 78 cents per share and 80 cents per share for the quarter, up from the prior forecast for a range between 75 cents per share and 78 cents per share, according to a statement.
Analysts have forecast for earnings of 77 cents per share on revenue of $679 million for the quarter.
"We had a very successful holiday season driven by strong execution in stores and online during the key holiday weeks," CEO Laurent Potdevin said in a statement. "Sales for the fourth quarter are exceeding expectations and gross margin rates and expenses remain in line with prior guidance."
Separately, recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate LULULEMON ATHLETICA INC as a Hold with a ratings score of C+. 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, weak operating cash flow and feeble growth in the company's earnings per share.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- LULU's revenue growth has slightly outpaced the industry average of 13.8%. Since the same quarter one year prior, revenues rose by 14.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in 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. To add to this, LULU has a quick ratio of 2.00, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for LULULEMON ATHLETICA INC is rather high; currently it is at 50.97%. Regardless of LULU's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, LULU's net profit margin of 11.08% compares favorably to the industry average.
- 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 12.1% when compared to the same quarter one year ago, dropping from $60.45 million to $53.15 million.
- Net operating cash flow has significantly decreased to -$6.22 million or 114.51% 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