{"id":1135099,"date":"2025-09-16T11:08:23","date_gmt":"2025-09-16T08:08:23","guid":{"rendered":"https:\/\/www.etoro.com\/?p=1135099"},"modified":"2026-03-20T19:39:10","modified_gmt":"2026-03-20T17:39:10","slug":"deep-dive-is-lululemon-oversold","status":"publish","type":"post","link":"https:\/\/www.etoro.com\/en-us\/news-and-analysis\/market-insights\/deep-dives\/deep-dive-is-lululemon-oversold\/","title":{"rendered":"Deep Dive: Is Lululemon Oversold?"},"content":{"rendered":"

The Daily Breakdown takes a closer look at Lululemon, which has falling sales but a historically low valuation. What’s next for LULU?<\/p>\n

Before we dive in, let\u2019s make sure you\u2019re set to receive The Daily Breakdown each morning. <\/span><\/i>To keep getting our daily insights<\/i><\/b>, all you need to do is <\/span><\/i>log in<\/span><\/i><\/a> to your eToro account.<\/span><\/i><\/p>\n

Deep Dive<\/span><\/h2>\n

Lululemon Athletica<\/a> shares have been decimated this year, down 58% in 2025. Worse, it\u2019s down almost 69% from its all-time high made in December 2023. What\u2019s going on with this once darling apparel maker?\u00a0<\/span><\/p>\n

The company\u2019s products are not appealing to its core customers the way they once did. Increased competition from companies like Vuori and Alo have hurt, while tariffs are impacting the firm\u2019s margins. These problems have led to a major headache for investors, as US sales continue to stall.\u00a0<\/span><\/p>\n

At the same time, investors are looking at the stock and wondering when enough is enough.\u00a0<\/span><\/p>\n

Will Sales Rebound?\u00a0<\/b><\/h4>\n

\"\"<\/p>\n

We\u2019re halfway through Lulu\u2019s fiscal year. When the company reported on Sept. 4th, management cut its full-year sales outlook to $10.85 billion to $11 billion. The outlook for 2026 and 2027 have become more pessimistic as well, as noted on the graphic above.\u00a0<\/span><\/p>\n

On the plus side, analysts actually expect growth \u2014 it\u2019s just not impressive growth.\u00a0<\/span><\/p>\n

Consensus estimates call for revenue growth of 3.5% this year, 4.8% next year, and 5.8% in the following year. That\u2019s currently mid-single-digit growth and hardly warrants a premium valuation.\u00a0<\/span><\/p>\n

Worse, earnings growth estimates are less consistent. Analysts expect an earnings <\/span>decline<\/span><\/i> of roughly 11% this year \u2014 which is likely already priced into the stock at this point, given its tumultuous fall \u2014 followed by estimates for just 1% growth in fiscal 2026 and about 8% growth in 2027.\u00a0<\/span><\/p>\n

The Bottom Line: <\/b>Lululemon\u2019s business could be near a trough, but the lack of clarity and excitement for growth in the out-years has investors feeling defeated. <\/span><\/p>\n

Want to receive these insights straight to your inbox?<\/strong><\/p>\n

Sign up here<\/a><\/p>\n

Diving Deeper<\/span><\/h2>\n

With a near-70% decline from the highs \u2014 down from ~$516 to ~$160 in less than two years \u2014 it\u2019s obvious that something isn\u2019t working and the stock is out of favor with Wall Street. For investors though, the question becomes: At what point is the valuation too low to ignore?<\/span><\/p>\n

Note: <\/b>Wall Street\u2019s consensus price target<\/span><\/i><\/a> on LULU stock is ~$203, implying roughly 27% upside from current levels.\u00a0<\/span><\/i><\/p>\n

\"Forward<\/p>\n

The chart above highlights the company\u2019s forward P\/E multiple, with shares trading at just 13 times expected earnings. Valuation can be a tricky thing though.\u00a0<\/span><\/p>\n

While this is by far LULU\u2019s lowest valuation in the last decade, there\u2019s no guarantee that it will be supportive for the stock. If earnings estimates turn out to be too high, the valuation is actually not as low as it appears right now. Further, investors may not assign a <\/span>premium valuation<\/span><\/i> to this company anymore given its operational issues. Instead, a <\/span>discounted valuation <\/span><\/i>may be the new norm.\u00a0<\/span><\/p>\n

These are risks that investors have to accept if they take a position in LULU stock.\u00a0<\/span><\/p>\n

Too Stretched?\u00a0<\/b><\/h4>\n

Despite meager revenue growth, this company remains profitable and free-cash flow positive. Outside of lease obligations, Lululemon runs a pretty tight balance sheet with very little debt. From those perspectives, it\u2019s reasonable for investors to wonder if the stock is oversold.\u00a0<\/span><\/p>\n

At the same time, there\u2019s nothing that says the stock\u2019s freefall is unwarranted or that shares will rebound meaningfully from current levels.\u00a0<\/span><\/p>\n

If Lululemon can find a trough in its business and return to growth, shares could rebound. But if management is forced to revise its outlook even lower, then the stock could have more downside ahead \u2014 and that is one of the key risks for investors to assess. <\/span><\/p>\n

Disclaimer:<\/i><\/b><\/p>\n

Please note that due to market volatility, some of the prices may have already been reached and scenarios played out.<\/i><\/b><\/p>\n","protected":false},"excerpt":{"rendered":"

The Daily Breakdown takes a closer look at Lululemon, which has falling sales but a historically low valuation. What’s next for LULU? Before we dive in, let\u2019s make sure you\u2019re set to receive The Daily Breakdown each morning. To keep getting our daily insights, all you need to do is log in to your eToro…<\/p>\n","protected":false},"author":130,"featured_media":1245682,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[6819],"tags":[],"asset_type":[],"class_list":["post-1135099","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-deep-dives"],"acf":[],"yoast_head":"The Daily Breakdown: Deep Dive: Is Lululemon Oversold?<\/title>\n<meta name=\"description\" content=\"The Daily Breakdown takes a closer look at Lululemon, which has falling sales but a historically low valuation. 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