LULU — lululemon athletica inc.
Snapshot dated September 28, 2026.
lululemon athletica inc. is a retailer primarily focused on high-performance technical athletic apparel designed for yoga, running, training, and other sweat-inducing activities. The company segments its revenue streams into corporate-owned retail stores, which serve as community hubs, and a direct-to-consumer digital channel that includes its global e-commerce platforms. Its core products include proprietary fabrics like Luon and Nulu, used in leggings, shorts, pants, and tops for both women and men. Lululemon operates a global footprint with hundreds of stores spanning North America, Europe, the Asia Pacific region, and the Middle East, employing thousands of staff members globally. The company distinguishes itself through a vertical retail model, controlling its design, product development, and store experience without utilizing wholesale distribution channels. Recently, the company has expanded its product offerings into footwear and developed a membership program intended to deepen customer engagement across its omnichannel network.
Fair Value / Share
$171.70
Price on September 28, 2026
$100.87
Upside to fair value
70.21%
Margin of safety 41.3%
Upside is measured against what you pay; margin of safety is measured against what the business is worth.
Data by Equibles and SEC filings. Figures are as of September 28, 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
$100.87
Market Cap
$11,390,139,530
Net Income (TTM)
$1,417,977,000
Diluted Shares
112.9 million
EPS (TTM)
$12.56
Earnings Yield
12.45%
AI Analysis
With a stock price of $100.87 and an EPS (TTM) of $12.56, lululemon athletica inc. currently generates an earnings yield of 12.45%. This figure sits significantly above the 4-5% benchmark associated with safe, guaranteed alternatives like bonds. Mechanically, this yield suggests that the market price is not currently embedding expectations of aggressive near-term earnings growth, as investors are being presented with a higher current return for each dollar of earnings. The earnings yield would rise if the share price were to decrease further or if the company's net income per share expanded. Conversely, a contraction in earnings or a rise in share price would lower this yield. This measure does not capture future growth prospects, capital expenditures, or the stability of the company’s underlying cash flows.
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's Return on Capital is calculated by dividing its TTM EBIT of $2B by its invested capital of $2.8B, which is the sum of its $754.2M in net working capital and $2B in net fixed assets. This calculation results in a Return on Capital of 70.66%. This figure sits well above the 30% benchmark used by this framework to denote an efficient use of operating capital. A higher return on capital indicates that for every dollar of tangible operating capital invested, the business generates a substantial amount of operating profit. This metric isolates operational performance from financing decisions, but it does not capture the impact of varying capital intensity across different industries, nor does it reflect heavy reinvestment phases where a company may choose to spend heavily to fund future growth, which can temporarily lower this figure regardless of efficiency.
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 | $10B | 5.1x |
| NKENIKE, Inc. | $4.2B | $52.8B | 12.5x |
| UAAUnder Armour, Inc. | -$119.7M | $2.1B | — |
Where LULU sits: 5.1x against a peer median of 12.5x (peers: 12.5x) — 59.6% 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 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 enterprise value of $10B and operating earnings of $2B, resulting in an Acquirer's Multiple of 5.1x. Its competitor Nike (NKE) has an enterprise value of $52.8B and operating earnings of $4.2B, yielding a multiple of 12.5x. The other competitor, Under Armour (UAA), has an enterprise value of $2.1B but is currently losing money, so no multiple can be calculated. Among the companies with a stated numeric multiple, LULU has the lowest figure at 5.1x, while NKE has the highest at 12.5x. LULU's multiple is 5.1x against a peer median of 12.5x (peers: 12.5x) — 59.6% below the median. This measure does not capture differences in capital structure or debt levels that might affect enterprise value. The gap between these multiples could narrow if LULU's operating earnings relative to its enterprise value were to decline, or if NKE were to improve its core operating profitability relative to its enterprise value.
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
Current profitability is strong as the company is generating positive net income and free cash flow relative to its assets, with cash flow fully supporting accounting profits.
- Return on Assets is positive at 18.67%
- Free Cash Flow to Total Assets is positive at 10.90%
- Accruals check passes with a ratio of 1.01, indicating cash flow from operations exceeds net income
This score indicates the business is currently self-sustaining; a shift toward negative cash flow or earnings 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
The balance sheet is strong, characterized by a lack of long-term debt, improving liquidity, and a reduction in the total share count.
- Long-term debt remains at 0, unchanged from the prior year
- Current ratio increased to 2.26 from 2.16, showing improved liquidity
- Net dilution is negative as shares decreased to 119.1 million from 123.9 million shares
The score reflects high financial flexibility, which would only diminish if the company began issuing significant debt or new equity.
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
Operational improvements are weak, as every measured efficiency and margin metric has declined compared to the previous year.
- Return on Assets fell to 18.67% from 23.87% a year ago
- Free Cash Flow to Total Assets dropped to 10.90% from 20.83%
- Gross Margin declined to 56.60% from 59.22%
- Asset Turnover slowed to 1.31 from 1.39
This section highlights a recent deceleration in business efficiency; a reversal would require expanding margins or generating higher revenue per dollar of assets.
Change in ROA (↑)
FailChange in FCFTA (↑)
FailChange in Gross Margin (↑)
FailChange in Asset Turnover (↑)
FailFramework conclusion
The total FS-Score of 6/10 indicates a solid but mixed financial profile where current profitability and balance sheet stability are offset by declining operational trends. While the company is healthy and cash-generative today, the score suggests the business is becoming less efficient relative to its own recent history. This mixed result indicates that any perceived cheapness in the stock reflects real operational headwinds rather than just market mispricing.
- Return on Assets declined year over year to 18.67%
- Gross Margin compressed from 59.22% to 56.60%
- The company maintains a debt-free position with long-term debt at 0
- Diluted shares outstanding were reduced to 119.1 million shares
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
$9.6B
PV of Terminal Value
$8.4B
= Business Value
$18B
Terminal value share
46.87%
Business value → share value
Intrinsic Value (business)
$18B
+ Cash & Equivalents
$1.4B
− Debt
$0
= Shareholders' Value
$19.4B
÷ Diluted Shares
112.9 million
= Fair Value / Share
$171.70
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
Trailing twelve months.
FY2024 $1.6B · FY2025 $1.6B · FY2026 $921.7M
Growth rate (yrs 1–10)
6%
Terminal growth (after yr 10)
3%
AI Analysis
This valuation applies a 12% discount rate, placing the company in the mid-risk bucket to account for its strong brand and balance sheet, balanced against the inherent volatility of fashion cycles and intensifying competition in the apparel space. The 6.00% growth rate for the next ten years reflects Lululemon's solid brand equity and ongoing international expansion, tempered by recent growth deceleration and concerns regarding market saturation. The valuation uses a fixed Year-1 free cash flow of $1.4B and a 3% terminal growth rate, which is a fixed standard applied to all companies rather than a specific business judgment. To arrive at the fair value per share, the intrinsic value of the business is adjusted for the company's cash and debt position before dividing by 112.9 million shares. This process results in a fair value per share of $171.70. With a current price of $100.87, the upside to fair value is 70.21%. The estimate carries a margin of safety of 41.3%, representing the buffer between the current price and the fair value estimate. The final result is most sensitive to the growth rate assumption, as even small variances in annual expansion speed have a compounding effect over the ten-year forecast period.
Overall Verdict
How the five signals above stack up together, then the full synthesis.
Earnings Yield
12.45% vs ~4-5% bond-yield benchmark
Return on Capital
70.66% ROC vs ~30% benchmark
Acquirer's Multiple
5.1x against a peer median of 12.5x (peers: 12.5x) — 59.6% below the median.
FS-Score
6/10 — Solid but mixed
Intrinsic Value
70.21% upside to fair value
These five measures capture a clear distinction between the company's operational efficiency and its current market price. The Return on Capital of 70.66% and an FS-Score of 6/10 illustrate the company's ability to generate returns on invested capital and its overall financial health, while the Earnings Yield of 12.45% and the Acquirer's Multiple of 5.1x—which sits 59.6% below the peer median of 12.5x—provide a perspective on its pricing relative to earnings and enterprise value. Furthermore, the calculation shows a 70.21% upside to fair value, with a 41.3% margin of safety. A tension exists between the high operational efficiency and the current pricing, suggesting the market has applied a discount relative to the firm's earning power. Because the FS-Score is mixed, a movement in that score toward the upper end of the scale would represent the most significant shift in the overall assessment, as it would reconcile the gap between current pricing and demonstrated operating performance.
Comments
Notes from readers on LULU — one each. Comments stay with the company, so they carry across to a later snapshot, and each one shows the date it was written.
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