Author argues Lululemon is undervalued at ~14x forward P/E with a debt-free balance sheet and 60%+ China growth, framing it as a hidden-in-plain-sight opportunity.
LULU — LONG The author argues LULU trades at roughly 14x forward P/E, the lowest valuation in ten years versus a historical 35x-40x, effectively pricing in zero growth for a company with 20% operating margins. The bull case rests on a fortress balance sheet with no debt and over $1B cash funding international expansion, plus a China market still growing 60%+ YoY while the US normalizes. The author also notes it trades far below Nike with better metrics. No specific risk or catalyst timeline is stated.
Current valuation at approximately 14x forward P/E multiple. To keep things in perspective, this has traded at 35x-40x in the past. It is pricing in zero growth for a firm with operating margins of 20%.