As of May 28, 2025, Lululemon Athletica Inc's estimated intrinsic value ranges from $156.42 to $423.53 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $423.53 | +31.9% |
| Discounted Cash Flow (5Y) | $373.96 | +16.4% |
| Dividend Discount Model (Multi-Stage) | $156.42 | -51.3% |
| Dividend Discount Model (Stable) | $193.78 | -39.7% |
| Earnings Power Value | $189.48 | -41.0% |
Is Lululemon Athletica Inc (LULU) undervalued or overvalued?
With the current market price at $321.20, the stock appears to be fairly valued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Lululemon Athletica Inc's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.84 | 1.22 |
| Cost of equity | 7.7% | 11.7% |
| Cost of debt | 4.5% | 4.5% |
| Tax rate | 28.5% | 29.1% |
| Debt/Equity ratio | 1 | 1 |
| After-tax WACC | 5.4% | 7.4% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $374 | $42,947M | 80.5% |
| 10-Year Growth | $424 | $48,902M | 66.9% |
| 5-Year EBITDA | $294 | $33,283M | 74.9% |
| 10-Year EBITDA | $353 | $40,436M | 60.0% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $1,307M |
| Discount Rate (WACC) | 7.4% - 5.4% |
| Enterprise Value | $17,567M - $23,995M |
| Net Debt | $(1,984)M |
| Equity Value | $19,552M - $25,979M |
| Outstanding Shares | 120M |
| Fair Value | $163 - $216 |
| Selected Fair Value | $189.48 |
| Metric | Value |
|---|---|
| Market Capitalization | $38592M |
| Enterprise Value | $36608M |
| Trailing P/E | 21.27 |
| Forward P/E | 20.09 |
| Trailing EV/EBITDA | 8.95 |
| Current Dividend Yield | 0.00% |
| Dividend Growth Rate (5Y) | 0.00% |
| Debt-to-Equity Ratio | 0.98 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $127.06 |
| Discounted Cash Flow (5Y) | 25% | $93.49 |
| Dividend Discount Model (Multi-Stage) | 20% | $31.28 |
| Dividend Discount Model (Stable) | 15% | $29.07 |
| Earnings Power Value | 10% | $18.95 |
| Weighted Average | 100% | $299.85 |
Based on our comprehensive valuation analysis, Lululemon Athletica Inc's weighted average intrinsic value is $299.85, which is approximately 6.6% below the current market price of $321.20.
Key investment considerations:
Given these factors, we believe Lululemon Athletica Inc is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.