The Value Perspective
Lululemon is currently trading at 6.8x EV/EBITDA, a 69% discount to its own 10-year median of 22x. To put that in perspective, this multiple is approaching the all-time low of 6.63x the stock has ever seen across its entire public history. The market is pricing it as though the brand is structurally impaired. The income statement says otherwise.
In fiscal year 2025, Lululemon generated $10.59B in revenue (+10% YoY), $1.81B in net income (+17%), and $1.13B in free cash flow. Its return on equity sits at 41% and ROIC at 25.9%, more than double the sector average. GuruFocus assigns a fair value of $436, implying 152% upside. Even the more conservative measure, applying a still-below-historical 18x P/E to trailing EPS of $14.72, produces a fair value of $265, or 53% above today's price.
The board has authorised $1.6B in share buybacks at current prices, roughly 9% of the entire market cap. No board spends $1.6 billion buying its own stock unless it believes the share price is materially below intrinsic value. That's the corporate equivalent of a billion-dollar insider buy.
What about US Sales declining?
The North American comparable sales slowdown is real, and it's the entire bear case. But the market has extrapolated a US-specific problem onto a global business, and that's the mistake. China Mainland grew +46% in Q3 2025. International revenue is running at nearly 20% constant-currency growth. As of March 13th, Lululemon opened its 100th EMEA store in Warsaw, its first location in Poland, as part of a plan to enter six new markets in 2026 alone (Greece, Austria, Poland, Hungary, Romania, India), the most new-market launches in a single year in the brand's history.
The brand isn't dying. It's expanding at an accelerating pace in every market that isn't called North America.
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Disclaimer
The user SeanTho holds no position in NasdaqGS:LULU. Simply Wall St has no position in any of the companies mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
