LULU — lululemon athletica inc.
Snapshot dated September 4, 2026.
Lululemon Athletica designs and retails high-performance athletic apparel and accessories primarily focused on yoga, running, and training activities. The company generates revenue through two primary segments: company-operated retail stores and a direct-to-consumer e-commerce platform that reaches customers globally. Operating over 700 stores across North America, Europe, and Asia, the brand targets active individuals who prioritize technical fabrics and lifestyle-oriented designs. Lululemon occupies a premium position in the athletic apparel industry, competing with established incumbents such as Nike and Under Armour by leveraging a community-focused retail model. Recently, the company has executed a strategic expansion into the footwear market, introducing proprietary running and training shoe lines to broaden its product ecosystem beyond apparel.
Fair Value / Share
$192.17
Price on September 4, 2026
$98.54
Margin of Safety
95.02%
Data by Equibles and SEC filings. Figures are as of September 4, 2026 and are not live.
Earnings Yield
Earnings Yield shows how much profit a company generates relative to its share price. EPS ÷ Stock Price.
Stock Price
$98.54
Market Cap
$11,127,038,260
Net Income (TTM)
$1,417,977,000
Diluted Shares
112.9 million
EPS (TTM)
$12.56
Earnings Yield
12.74%
AI Analysis
The company's earnings yield is 12.74%, calculated from a share price of $98.54 and EPS (TTM) of $12.56. This figure sits notably higher than the 4-5% return available from a safe alternative like a bond. A yield at this level implies that the market is pricing the stock such that each dollar of current earnings costs less than it would in lower-yielding assets, suggesting expectations of different future earnings trajectories. This yield would rise if the share price were to fall or if the company increased its earnings per share. This measure relies strictly on current price and historical earnings, failing to incorporate external factors such as brand momentum, inventory risks, or shifts in consumer spending habits.
Return on Capital
EBIT ÷ (Net Working Capital + Net Fixed Assets) — how efficiently the business turns capital into profit.
EBIT (TTM)
$1,978,775,000
Net Working Capital
$754,199,000
Net Fixed Assets
$2,046,363,000
Invested Capital
$2,800,562,000
Return on Capital
70.66%
AI Analysis
Lululemon Athletica Inc. generates a Return on Capital of 70.66%. This figure is derived from an EBIT of $2B, divided by an estimated invested capital base of $2.8B, which combines $754.2M in net working capital and $2B in net fixed assets. By the framework's benchmark, a result of 70.66% indicates a highly efficient use of capital, as it exceeds the 30% threshold for efficient performance. This measure evaluates the profit generated relative to the tangible operating capital required to run the business. While high, this result reflects the specific capital intensity of this company's business model; it does not capture intangible assets or the specific strategic stage of the business, such as heavy reinvestment phases that might temporarily depress the ratio for other firms.
Acquirer's Multiple
Enterprise Value ÷ Operating Earnings — how many years of operating earnings it would take to buy the whole business.
| Company | Operating earnings | Enterprise value | Multiple |
|---|---|---|---|
| LULUlululemon athletica inc. | $2B | $9.7B | 4.9x |
| NKENIKE, Inc. | $4.2B | $57.4B | 13.6x |
| UAAUnder Armour, Inc. | -$119.7M | $2.4B | — |
Where LULU sits: 4.9x against a peer median of 13.6x (peers: 13.6x) — 63.8% below the median.
Show the enterprise value bridge for each companyHide the enterprise value bridge
LULU
Debt $0. This is the company's reported total debt — borrowings due within a year plus long-term borrowings. The company separately reports $2.1B of operating lease liabilities as of 2026-08-02 ($1.8B non-current, $366.6M current). These are excluded from debt because operating lease cost already sits inside operating earnings — counting the liability again as debt would charge the business twice for the same thing.
NKE
Named as a competitor: competes directly in premium athletic apparel, footwear, and activewear
Debt $7.9B. This is the company's reported total debt — borrowings due within a year plus long-term borrowings. The company separately reports $3.1B of operating lease liabilities as of 2026-05-31 ($2.6B non-current, $478M current). These are excluded from debt because operating lease cost already sits inside operating earnings — counting the liability again as debt would charge the business twice for the same thing.
UAA
Named as a competitor: competes in performance athletic apparel and sports accessories
Debt $591.2M. This is the company's reported total debt — borrowings due within a year plus long-term borrowings. The company separately reports $784.9M of operating lease liabilities as of 2026-06-30 ($632.3M non-current, $152.6M current). These are excluded from debt because operating lease cost already sits inside operating earnings — counting the liability again as debt would charge the business twice for the same thing.
Operating earnings — LULU
AI Analysis
Lululemon athletica inc. (LULU) has an Acquirer's Multiple of 4.9x, derived from an enterprise value of $9.7B and operating earnings of $2B. In comparison, Nike (NKE) has an Acquirer's Multiple of 13.6x, calculated from an enterprise value of $57.4B and operating earnings of $4.2B. Under Armour (UAA) is currently losing money, so no multiple can be calculated for it. Among these, LULU has the lowest multiple and NKE has the highest. LULU's result is 4.9x against a peer median of 13.6x (peers: 13.6x) — 63.8% below the median. This measurement captures how many years of operating earnings are required to purchase the business, but it does not account for differences in debt levels or capital intensity. The comparison would shift if the companies' capital structures diverged further or if there were a structural change in operating margins across the group.
FS-Score
A 10-check read on financial health, across profitability, balance-sheet stability and operating momentum.
FS-Score
6/10
Decent score — worth a deeper look before investing.
Section 1
Current Profitability
3/3
This section is Strong because the business is currently generating positive returns and cash flow, meeting all three profitability benchmarks.
- Return on Assets is positive at 18.67%
- Free Cash Flow to Total Assets is positive at 10.90%
- Cash Flow from Operations of 1.01 times Net Income indicates that earnings are fully backed by cash
A score of 3/3 indicates that current operations are self-sustaining, though a drop in the cash-to-income relationship would weaken this result.
Return on Assets (ROA > 0)
PassFree Cash Flow to Total Assets (FCFTA > 0)
PassAccruals (CFO / Net Income > 1)
PassSection 2
Stability
3/3
This section is Strong, as the company has maintained a debt-free position while improving its liquid buffer and reducing its share count.
- Long-term debt remained at 0, meaning leverage is not rising
- The Current Ratio increased from 2.16 to 2.26, showing improved liquidity
- Net Dilution was avoided as the annual weighted average share count fell from 123.9 million shares to 119.1 million shares
This score reflects a robust balance sheet that does not currently require outside financing to sustain itself.
Change in Leverage (↓ or unchanged)
PassChange in Liquidity (↑ Current Ratio)
PassNet Dilution (annual diluted weighted-average shares, this year vs last)
PassSection 3
Recent Operational Improvements
0/4
This section is Weak, as every operational metric tracked for growth or efficiency has declined compared to the prior year.
- Return on Assets fell from 23.87% to 18.67%
- Free Cash Flow to Total Assets declined from 20.83% to 10.90%
- Gross Margin contracted from 59.22% to 56.60%
- Asset Turnover slowed from 1.39 to 1.31
A 0/4 score here indicates the business is currently less efficient and less profitable per dollar of assets than it was a year ago.
Change in ROA (↑)
FailChange in FCFTA (↑)
FailChange in Gross Margin (↑)
FailChange in Asset Turnover (↑)
FailFramework conclusion
The total score of 6/10 indicates a solid but mixed financial profile. While the company is currently profitable and maintains a very stable balance sheet, its operational momentum has slowed across all measured efficiency and margin categories. This score suggests that while the company is not in immediate financial distress, the reason for any perceived cheapness in the stock may be tied to these broad year-over-year operational declines rather than simple market mispricing.
- The 0/4 score in operational improvements reflects a decline in Asset Turnover to 1.31
- Profitability remains healthy with a positive Return on Assets of 18.67%
- Liquidity improved year over year to a Current Ratio of 2.26
- Gross Margin has trended downward to 56.60%
Intrinsic Value (DCF)
A 10-year discounted cash flow, then the bridge from business value to value per share.
Reported cash flow → unlevered free cash flow
Free Cash Flow (reported)
$1.4B
+ After-Tax Interest Expense
$725.8K
= Unlevered Free Cash Flow
$1.4B
Business value (10-year DCF)
PV of Years 1–10
$10.3B
PV of Terminal Value
$10B
= Business Value
$20.3B
Business value → share value
Intrinsic Value (business)
$20.3B
+ Cash & Equivalents
$1.4B
− Debt
$0
= Shareholders' Value
$21.7B
÷ Diluted Shares
112.9 million
= Fair Value / Share
$192.17
Divided by 112.9 million diluted shares — the weighted-average diluted count from the most recent quarterly income statement, for the quarter ended 2026-08-02.
Risk bucket → discount rate
mid (12%)
Year-1 FCF
$1.4B
Growth rate (yrs 1–10)
8%
Terminal growth (after yr 10)
3%
AI Analysis
Lululemon athletica inc. is assigned a mid-risk bucket with a 12% discount rate, reflecting its position as a strong apparel brand that nonetheless faces potential volatility from shifting consumer tastes and fashion cycles. The forecast utilizes a fixed Year-1 free cash flow of $1.4B as the starting point. Over the next decade, the model applies an 8.00% growth rate, balancing the company's historical cash generation against a recent moderation in growth trajectory. A terminal growth rate of 3% is used, which is a fixed rate applied across all valuations to mimic long-term economic assumptions rather than specific company expectations. The resulting terminal value accounts for 49.1% of the total business value. By aggregating the present value of the next decade's cash flows and the terminal value, then adjusting for cash and debt, the framework calculates a fair value per share of $192.17. When measured against the current price of $98.54, the margin of safety is 95.02%, representing the buffer between the estimate and the market price. The valuation is most sensitive to the 8.00% growth rate assumption; because nearly half of the total business value is derived from the terminal value, any significant deviation in the ability to sustain long-term cash flow growth would alter the final fair value figure more than any other single input.
Overall Verdict
How the five signals above stack up together, then the full synthesis.
Earnings Yield
12.74% vs ~4-5% bond-yield benchmark
Return on Capital
70.66% ROC vs ~30% benchmark
Acquirer's Multiple
4.9x against a peer median of 13.6x (peers: 13.6x) — 63.8% below the median.
FS-Score
6/10 — Solid but mixed
Intrinsic Value
95.02% margin of safety
These five checks present a clear profile of a business demonstrating operational strength alongside valuation metrics that sit well below typical benchmarks. Return on Capital at 70.66% and the FS-Score of 6/10 provide the operational picture, quantifying how efficiently the company generates profit from its invested capital and its overall financial health. These are measured against the valuation group, which includes an Earnings Yield of 12.74%, an Acquirer's Multiple of 4.9x—representing a 63.8% position below the peer median of 13.6x—and an Intrinsic Value estimate indicating a 95.02% margin of safety. The result is a consistent alignment where the valuation metrics indicate the company is positioned on the low end of recent pricing relative to both peers and its own historical capacity to generate earnings. This suggests the market is pricing the stock at a steep discount to these calculated financial benchmarks. A shift in the FS-Score to a higher tier would most significantly alter this picture, as it would indicate strengthening operational consistency to support these current valuation levels.