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Will Lululemon's (LULU) Earnings Rebound Again in Q3? - Analyst Blog

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Lululemon Athletica Inc. ( LULU ), a leading yoga-inspired athletic apparel and accessories retailer, is slated to report its third-quarter fiscal 2014 results on Dec 11, 2014. In the last quarter, it posted a positive surprise of 13.8%. Let's see how things are shaping up for this announcement.

Factors Influencing the Upcoming Results

Lululemon seems to be regaining its reputation as a leading yoga-inspired athletic apparel retailer as evident from its better-than-expected earnings performance in the near past. The company has been gaining traction from its ongoing strategic move to enhance product quality and brand as well as its focus on global expansion. However, the company cannot escape the increased competition from retailers venturing into the yoga apparel business.

Though much remains to be done in achieving its global growth target, the company is optimistic about its financial performance in the near future. For the third quarter, the company expects earnings of 36 to 38 cents a share, along with revenue of $420 million to $425 million. While we abide by the company's optimism and the progress it has shown lately, we are still apprehensive as to whether it will outperform in the upcoming quarter.

Earnings Whispers?

Our proven model does not conclusively show that Lululemon is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, #2 or #3 for this to happen. This is not the case here, as you will see below.

Zacks ESP: ESP for Lululemon is 0.00% since the Most Accurate estimate stands at 38 cents per share, which is in line with the Zacks Consensus Estimate.

Zacks Rank: Lululemon carries a Zacks Rank #3 (Hold), which when combined with a 0.00% ESP makes surprise prediction difficult. We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat:

Nike Inc. ( NKE ) has an Earnings ESP of +1.45% and a Zacks Rank #2 (Buy).

Carnival Corporation ( CCL ) has an Earnings ESP of +10.53% and a Zacks Rank #2.

Red Hat Inc. ( RHT ) has an Earnings ESP of +3.70% and a Zacks Rank #3.

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CARNIVAL CORP (CCL): Free Stock Analysis Report

NIKE INC-B (NKE): Free Stock Analysis Report

LULULEMON ATHLT (LULU): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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