Lululemon Surges After Q2 Results

Yoga-inspired apparel retailer Lululemon

has been a growth stock to watch in recent years. The company has grown to a market capitalization of nearly $11 billion and has become a leading women's retailer with its array of apparel offerings. Over the last five years, LULU has risen better than 320 percent, with most of those gains coming since the beginning of 2011. Over the last 52-weeks, the shares have added more than 33 percent. The stock's rich valuation belies thae fact that this is one of the Street's preferred growth names. Shares trade at a trailing P/E of over 55, a forward P/E of 36.59, and a PEG ratio of 1.55. Next year, analysts expect that the company will report revenue growth of nearly 24 percent. After pulling back throughout the Summer, LULU is once again moving aggressively higher. On Friday, the stock has surged around 10 percent after the company released its fiscal second-quarter results prior to the opening bell. Most of the gains have come intraday, after the stock opened near the unchanged mark. Lululemon reported net income of $57.22 million or $0.39 per share, compared to $38.38 million or $0.26 per share in the year ago period. On a normalized basis, earnings per share were $0.34. This exceeded Wall Street consensus earnings expectations of $0.31 per share. Net revenue in the period was up 33 percent to $282.63 million versus $212.32 million last year. This came in slightly ahead of analysts' consensus revenue estimates of $282.34 million. Comparable-store-sales were up 13 percent on a reported basis, and 15 percent in constant dollars. Gross margins fell to 55.1 percent in the quarter versus 57.5 percent a year ago. Operating margins declined to 24.8 percent from 28 percent. Looking ahead to Q3, LULU said that it expects EPS between $0.34 and $0.36 and net revenues of $300 million to $305 million. This is above current analysts' consensus of $0.33 on revenues of $300.12 million. For the fiscal year, LULU now sees earnings per share between $1.76 and $1.81 on net revenues of $1.345 billion to $1.360 billion. This is above the company's previous guidance range of $1.55 to $1.60 per share, on net revenues of $1.32 billion to $1.34 billion. Currently, analysts have consensus EPS estimates of $1.62 on revenues of $1.35 billion for the fiscal year.