lululemon athletica inc. (LULU): a likely value trap?

Avoid — cheap because its core North American business is shrinking and margins keep eroding, with no clear turnaround yet.

⚠ TRAP Fundamentals60/100

Down 78% from its all-time high of $511.29 — now $113.37

Why LULU dropped

Lululemon has repeatedly cut guidance over the past year due to a genuine, ongoing decline in its most important market (North America), not a one-time shock: same-store sales there have been negative for roughly two years, tariffs are structurally cutting into margins, and the brand has been forced into heavy discounting that undermines its premium positioning.

Fwd P/E 10.1Op margin 11.2%Rev growth 4.3%Debt/equity 44.3%Analyst upside 12.7%

How this scored 60/100

✅ Passes all 4 hard checks — profitable, cash-generative, and financially survivable.

✅ Makes money Net profit margin 13.0%

✅ Generates cash Free cash flow $1.1B

✅ Not drowning in debt Debt/equity 44.3% (limit 200%)

✅ Can pay its bills Current ratio 2.2 (needs 1+)

Bar length shows how much each metric is worth — a 10-point metric is twice as wide as a 5-point one. Hover any row for what it means.

Profitability Does it actually make money? 17/25

Operating margin 11.2% 4/9

Net profit margin 13.0% 5/8

Return on equity 32.0% 8/8

Growth Is it getting bigger, or dying? 3/25

Revenue growth 4.3% 3/9

Earnings growth -35.0% 0/8

Expected profit change -8.7% 0/8

Value Is it cheap right now? 18/25

Forward P/E 10.1 9/10

PEG ratio 0.9 7/8

Analyst target upside 12.7% 1/7

Balance sheet Will it survive? 22/25

Debt / equity 44.3% 9/10

Current ratio 2.2 7/8

Free cash flow $1.1B 7/7

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Analysis generated by SmartStonks's AI from public fundamentals and news, first flagged 2026-07-23. Research only — not financial advice.