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LULU, a -23% lower target price
Current 385 Target 292 -23%

December 18th 2021
1 minute read
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Sales declined slightly -0.1%
  • Sales declined slightly & seasonally -0.1% in the third quarter to 1,450 million dollars vs our 1,524 million dollars forecast.
  • This brings the quarterly average to 11% growth.
  • We predict average growth of 8% in this next 12 months to bring sales to 1,720 million dollars in the third quarter of 2022.
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Costs 11 points lower!
  • The cash cost ratio was 11 points lower at -55% in the third quarter giving a higher 541 million dollars net profit.
  • The average cost ratio is at -65% now.
  • We conservatively use higher -71% cost ratio to predict a 351 million dollars profit in the third quarter of 2022.
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Cashflow higher close to average
  • Free cashflow was higher at 345 million dollars in the third quarter with -313 million dollars investment Cashflow.
  • Average quarterly Cashflow is at 352 million dollars now.
  • We assume the same -313 million dollars investment spending which with higher sales but lower margins gives a 191 million dollars Cashflow in the third quarter of 2022.
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Balance sheet, higher leverage
  • Cash declined from 1,170 to 994 million dollars in the third quarter.
  • Liabilities increased from 1,734 to 1,914 million dollars so net cash from -564 to -920 million dollars.
  • With our forecast cashflow & a -444 million dollars equity payout net cash will be -525 million dollars in 12 months time.
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Valuation, a -23% lower target price
  • LULU capital from the last 15 quarters jumped to 1,784 million dollars in the third quarter with a -523 equity payout & will be 2,539 million dollars in12 months time.
  • At the current market value of 49,740 million dollars based on our forecasts it’s at 9.39 X assets with a 4 years payback & a 1% yield.
  • Our cashflow forecast is 838 million dollars which means an 59 X valuation. A 45 X valuation gives a -23% lower target price of 292 dollars.