Market Overview

ROCE Insights For Lululemon Athletica


Looking at Q2, Lululemon Athletica (NASDAQ: LULU) earned $135.87 million, a 314.87% increase from the preceding quarter. Lululemon Athletica also posted a total of $902.94 million in sales, a 38.5% increase since Q1. Lululemon Athletica earned $32.75 million, and sales totaled $651.96 million in Q1.

What Is Return On Capital Employed?

Changes in earnings and sales indicate shifts in Lululemon Athletica’s Return on Capital Employed, a measure of yearly pre-tax profit relative to capital employed in a business. Generally, a higher ROCE suggests successful growth in a company and is a sign of higher earnings per share for shareholders in the future. In Q2, Lululemon Athletica posted an ROCE of 0.07%.

It is important to keep in mind ROCE evaluates past performance and is not used as a predictive tool. It is a good measure of a company's recent performance, but several factors could affect earnings and sales in the near future.

ROCE is an important metric for the comparison of similar companies. A relatively high ROCE shows Lululemon Athletica is potentially operating at a higher level of efficiency than other companies in its industry. If the company is generating high profits with its current level of capital, some of that money can be reinvested in more capital which will lead to higher returns and earnings per share growth.

In Lululemon Athletica's case, the positive ROCE ratio will be something investors pay attention to before making long-term financial decisions.

Q2 Earnings Recap

Lululemon Athletica reported Q2 earnings per share at $0.74/share, which beat analyst predictions of $0.55/share.


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