Lululemon Pricier Than Peers Given Growth Profile
(Bloomberg) -- Lululemon valuation is richer than many of its peers in the retail sector. Shares jumped as much as 14% today after the athletic clothing retailer reported second quarter revenue above analyst expectations, a sign that investors are still willing to pay significant premiums for growth.
Lululemon trades at a last-twelve-months price-to-earnings ratio of 65.4 compared to 16.9 for the S&P Retail Select Industry Index. Its price-to-earnings ratio is also higher than other companies in the athletic space such as Nike, Under Armour and Adidas. Lululemon is also growing revenue at a rate much higher than its peers.
Jefferies analyst Randal Konik noted shares of Lululemon look “expensive” and that it’s already “strong” business reduces the potential for positive catalysts. He prefers Nike and Under Armour. Nike reports first quarter earnings on Sept. 23.
©2021 Bloomberg L.P.