Value
7.6/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 8.9 |
| P/S | 9.5 |
| EV/EBITDA | 8.3 |
| Fwd P/E | 9.1 |
| PEG | 7.1 |
| Analyst target | 4.0 |
- ▸Forward P/E: 11.4x
- ▸PEG: 0.99
- ▸Attractively valued
LULU · Why this verdict
Why lululemon athletica (LULU) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score5.9/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Lululemon presents a high-quality franchise — excellent return on equity of 32%, best-in-class margins, a Piotroski score of 8 out of 9, and four consecutive earnings beats — trading at a forward P/E of 10.1x amid a confirmed momentum downtrend and extreme negative sentiment, creating a potentially attractive setup for patient investors willing to wait for the technical picture to stabilize before committing.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The business earns a high-quality designation — excellent return on equity of 32%, a Piotroski score of 8 out of 9, best-in-class margins versus peers, and free cash flow at 78% of net income — paired with four consecutive earnings beats averaging roughly 7.6% above consensus, confirming both quality of earnings and consistent execution discipline. Quality breakdown | Operating and gross margins hold at current levels, the Piotroski score stays above 7, and the beat streak extends through the next two reported quarters. | →Stable |
| CounterA weak growth score signals the high-quality business is not currently translating its margins into revenue expansion, which can weigh on the multiple if the market loses patience waiting for growth to reaccelerate. | ||
At a forward P/E of 10.1x and PEG of 0.65, the stock screens as attractively valued relative to both the quality of the underlying business and its historical premium — suggesting the market has overshot on pessimism and created a discounted entry into a high-quality franchise. Valuation breakdown | Multiple expansion toward 15x forward P/E as the growth narrative stabilizes, with forward earnings estimates maintained or increased over the next two reported periods. | ↓Deteriorating |
| CounterA forward P/E of roughly 10x is only attractive if growth reaccelerates; if revenue growth remains weak, there is limited fundamental support for multiple expansion and the apparent cheapness could persist indefinitely. | ||
The stock is in a confirmed downtrend — below the 200-day moving average with the long-term average declining at roughly -6.7% over the past 30 days, falling on-balance volume, and a death cross in place — creating a near-term price headwind that must resolve before the valuation and quality case can drive a sustained recovery. Momentum breakdown | Price crosses above the 200-day moving average and holds for at least 10 consecutive sessions, with on-balance volume turning positive. | ↑Improving |
| CounterAt current deeply oversold levels, on-balance volume and price near multi-year lows may reflect accumulation by patient long-term buyers; any positive catalyst could produce a sharp reversal from these depressed conditions. | ||
Despite high-quality fundamentals, sentiment has reached an extreme negative reading of -0.78, characterized as a potential contrarian signal — a setup where excessive pessimism may already be priced in and any positive fundamental development could drive a disproportionate recovery. Bull case | EPS beats consensus in the next 2 consecutive reported quarters, confirming the quality of the business has not deteriorated and the negative sentiment was overcorrected. | →Stable |
| CounterExtreme negative sentiment can persist or intensify if weak growth continues to disappoint; a negative sentiment reading alone is insufficient to drive a recovery without an accompanying improvement in the revenue growth trajectory. | ||
The business earns a high-quality designation — excellent return on equity of 32%, a Piotroski score of 8 out of 9, best-in-class margins versus peers, and free cash flow at 78% of net income — paired with four consecutive earnings beats averaging roughly 7.6% above consensus, confirming both quality of earnings and consistent execution discipline.
→StableQuality breakdown
- Expectation
- Operating and gross margins hold at current levels, the Piotroski score stays above 7, and the beat streak extends through the next two reported quarters.
CounterA weak growth score signals the high-quality business is not currently translating its margins into revenue expansion, which can weigh on the multiple if the market loses patience waiting for growth to reaccelerate.
At a forward P/E of 10.1x and PEG of 0.65, the stock screens as attractively valued relative to both the quality of the underlying business and its historical premium — suggesting the market has overshot on pessimism and created a discounted entry into a high-quality franchise.
↓DeterioratingValuation breakdown
- Expectation
- Multiple expansion toward 15x forward P/E as the growth narrative stabilizes, with forward earnings estimates maintained or increased over the next two reported periods.
CounterA forward P/E of roughly 10x is only attractive if growth reaccelerates; if revenue growth remains weak, there is limited fundamental support for multiple expansion and the apparent cheapness could persist indefinitely.
The stock is in a confirmed downtrend — below the 200-day moving average with the long-term average declining at roughly -6.7% over the past 30 days, falling on-balance volume, and a death cross in place — creating a near-term price headwind that must resolve before the valuation and quality case can drive a sustained recovery.
↑ImprovingMomentum breakdown
- Expectation
- Price crosses above the 200-day moving average and holds for at least 10 consecutive sessions, with on-balance volume turning positive.
CounterAt current deeply oversold levels, on-balance volume and price near multi-year lows may reflect accumulation by patient long-term buyers; any positive catalyst could produce a sharp reversal from these depressed conditions.
Despite high-quality fundamentals, sentiment has reached an extreme negative reading of -0.78, characterized as a potential contrarian signal — a setup where excessive pessimism may already be priced in and any positive fundamental development could drive a disproportionate recovery.
→StableBull case
- Expectation
- EPS beats consensus in the next 2 consecutive reported quarters, confirming the quality of the business has not deteriorated and the negative sentiment was overcorrected.
CounterExtreme negative sentiment can persist or intensify if weak growth continues to disappoint; a negative sentiment reading alone is insufficient to drive a recovery without an accompanying improvement in the revenue growth trajectory.
Per-dimension breakdown
Quality
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 10.0 |
| Gross margin | 7.1 |
| Op margin | 4.5 |
| Net margin | 6.5 |
| Current ratio | 7.7 |
| FCF quality | 5.8 |
| Moat | 7.1 |
| Piotroski F | 8.9 |
- ▸Excellent ROE: 32%
- ▸Earnings quality warning: 78% FCF/NI
- ▸Strong Piotroski F-Score: 8/9
- ▸High-quality business
Growth
1.8/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.6 |
| EPS growth | 0.0 |
Momentum
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.1 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 6.0 |
| Volume | 0.0 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -4.8%/30d — confirmed downtrend
Sentiment
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 5.4 |
| erm sentiment | 4.3 |
- ▸Contrarian divergence: +2.0 (bearish sentiment + deep value + high quality)
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Negligible insider buying — $500,384 (0.003% of mkt cap)
- ▸Institutions accumulating
Peer rank
6.1/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 5.7 |
| quality rank | 7.7 |
| growth rank | 2.2 |
- ▸Attractive P/E vs peers
- ▸Best-in-class margins
Technical
2.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 2.4 |
| support resistance | 2.1 |
| 52w position | 0.3 |
| gap | 6.0 |
Risk (lower is worse)
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.4 |
| days to cover | 7.9 |
| volatility | 4.4 |
| put call | 2.2 |
| implied vol | 4.3 |
| max pain risk | 3.0 |
| beta | 7.8 |
| debt equity | 8.2 |
- ▸Elevated put/call: 1.68
- ▸Above max pain $60
Catalyst
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 3.5 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 6.4 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more.
Engine technical detail
verdict_path:
L4:PATH_F_HOLDPassed (8)
- MOMENTUM:5.8>=5.5
- INSIDER:OK
- DEATH_CROSS:QUALITY_MOMENTUM_EXEMPT
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:23d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.6=NEGATIVE
Warning (1)
- DEATH_CROSS:quality=7.5>=7.5+momentum=5.8>=5.0 exempted
Reward-to-Risk
-0.62
Upside
-7.7%
Downside
12.5%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 69
EdgeCatalyst-Driven — Earnings in 23d with 4/4 beat streak
SuitabilitySpeculative — Drawdown -48% (>40% off 52w high)
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: MOMENTUM:5.8>=5.5. Top dim: Value at 7.6; weakest: Growth at 1.8. No conviction either direction.
The strongest dimensions are Value at 7.6, Quality at 7.5, and Insider at 7.3; the weakest are Growth at 1.8, Technical at 2.7, and Risk (lower is worse) at 5.4. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -0.62 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1High Quality Business Execution
Trip ifGross margin compresses below 55% for 2 consecutive quarters.
- P2Attractive Valuation Quality Discount
Trip ifForward P/E expands above 18x without a commensurate increase in forward earnings estimates.
- P3Momentum Breakdown Near Term Headwind
Trip ifPrice closes above the 200-day moving average and holds for 10 consecutive trading sessions.
- P4Contrarian Extreme Sentiment Signal
Trip ifEPS surprise falls below 0% for 2 consecutive reported quarters.