Shares of Lululemon (LULU) fell in after-hours trading after the clothing retailer reported its Q2 earnings results. Adjusted earnings per share came in at $3.15, which beat analysts’ consensus estimate of $2.94 per share. Interestingly, the company has beat estimates in each of its previous nine quarters.
In addition, sales increased by 7.2% year-over-year, with revenue hitting $2.37 billion mainly due to the company’s international sales, which grew 29% (31% on a constant dollar basis). However, this fell short of the $2.408 billion that analysts were looking for.
In addition, gross profits increased by 9%, which means that the company demonstrated operating leverage since it increased more than revenue. Indeed, the gross margin increased by 80 basis points to 59.6%.
Looking forward, management now expects revenue and adjusted earnings per share for FY 2024 to be in the ranges of $10.375 billion to $10.475 billion and $13.95 to $14.15, respectively. For reference, analysts were expecting $10.621 billion in revenue along with an adjusted EPS of $14.01.
Investor Sentiment for LULU Stock Is Currently Very Positive
The sentiment among TipRanks investors is currently Very Positive. Out of the 753,382 portfolios tracked by TipRanks, 0.7% hold LULU stock. In addition, the average portfolio weighting allocated towards LULU among those who do have a position is 4.52%.
What’s interesting is that this is an increase from the previous earnings report, when 0.6% of investors had a position. This shows that investors saw LULU stock’s pullback since its Q1 report as a buying opportunity and suggests that they believe the firm’s recent troubles will eventually come to pass.
In addition, in the last 30 days, 4.9% of those holding the stock increased their positions. As a result, the stock’s sentiment is above the sector average, as demonstrated in the following image:
Is LULU a Good Stock to Buy?
Turning to Wall Street, LULU has a Moderate Buy consensus rating based on 14 Buys, nine Holds, and one Sell assigned in the past three months. After a 49% year-to-date decline, the average LULU price target of $340.17 per share implies 30% upside potential. However, it’s worth noting that estimates will likely change following today’s earnings report.
