6/16/25 :: VROCKSTAR :: 
LULU
Comment at low $240s
- see comment from 6/6/25 about why $260 post EPS was "interesting" but not obvious to own ST
- now we're only down a modest ~10% from there, so not much has really changed, except discretionary stocks have further drained. so this is not LULU specific per se, but sector/ factor beta
- when you take LT leases out of the EV of ~29.3 bn as of writing, or about 1.5 bn = you get ~27.8 bn. when you consider PF capex is about 500 mm (ex growth)... you end up with FCF this year of ~1.5 bn. so 1.5/ 27.8 = 5.4%.
- in the current macro where consumer has yet to really trough, or where we get "all clear cut to rates" (which is not my base case - if anything i think rates could stay sticky or even head higher in the ST), this means yield for this type of name post the last EPS comms might have to approach 6-7% all else equal
- the mid teens PE of ~16x is "buy" (again referencing the last note), but in this sort of macro/ environment, 13...14...15x is also reasonable until the mkt can underwrite exactly where the "trough" will be and start to put a more comfortable '26 estimate on the stock (we're not there).
- right now there are only three discretionary names i like in this order:
ANF > 
YETI > $lulu. i only own ANF b/c the FCF yield is nearly 15% on my est. and growth/ mgns also decent/ last EPS was "good". I trade around YETI (don't currently own), and i see reason LULU could get a ST bid here all else equal, so i'm playing a bit of a ST bounce here in the $240 region with some slight ITM option exposure for july.
- however, i'm aware that the low is probably not in
- and i've also seen this stock make nice mean reverting moves before it needs to find a lower level especially b/c the brand is great, the growth is not over... and eventually this will be a top tier discretionary name to own and the mkt is currently pricing it as such, anyway, at mid teens EPS when the rest of the B tier stuff is already single digits. *there's a reason for that*.
- food for thought.
V
LULUComment at low $240s
- see comment from 6/6/25 about why $260 post EPS was "interesting" but not obvious to own ST
- now we're only down a modest ~10% from there, so not much has really changed, except discretionary stocks have further drained. so this is not LULU specific per se, but sector/ factor beta
- when you take LT leases out of the EV of ~29.3 bn as of writing, or about 1.5 bn = you get ~27.8 bn. when you consider PF capex is about 500 mm (ex growth)... you end up with FCF this year of ~1.5 bn. so 1.5/ 27.8 = 5.4%.
- in the current macro where consumer has yet to really trough, or where we get "all clear cut to rates" (which is not my base case - if anything i think rates could stay sticky or even head higher in the ST), this means yield for this type of name post the last EPS comms might have to approach 6-7% all else equal
- the mid teens PE of ~16x is "buy" (again referencing the last note), but in this sort of macro/ environment, 13...14...15x is also reasonable until the mkt can underwrite exactly where the "trough" will be and start to put a more comfortable '26 estimate on the stock (we're not there).
- right now there are only three discretionary names i like in this order:
ANF > YETI > $lulu. i only own ANF b/c the FCF yield is nearly 15% on my est. and growth/ mgns also decent/ last EPS was "good". I trade around YETI (don't currently own), and i see reason LULU could get a ST bid here all else equal, so i'm playing a bit of a ST bounce here in the $240 region with some slight ITM option exposure for july.- however, i'm aware that the low is probably not in
- and i've also seen this stock make nice mean reverting moves before it needs to find a lower level especially b/c the brand is great, the growth is not over... and eventually this will be a top tier discretionary name to own and the mkt is currently pricing it as such, anyway, at mid teens EPS when the rest of the B tier stuff is already single digits. *there's a reason for that*.
- food for thought.
V
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.