As of September 9, 2025, Lululemon Athletica Inc's estimated intrinsic value ranges from $133.67 to $336.62 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $336.62 | +103.2% |
| Discounted Cash Flow (5Y) | $293.50 | +77.1% |
| Dividend Discount Model (Multi-Stage) | $133.68 | -19.3% |
| Dividend Discount Model (Stable) | $133.67 | -19.3% |
| Earnings Power Value | $169.08 | +2.0% |
Is Lululemon Athletica Inc (LULU) undervalued or overvalued?
With the current market price at $165.69, the stock appears to be significantly undervalued.
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 | 1.1 | 1.37 |
| Cost of equity | 8.9% | 12.5% |
| Cost of debt | 4.5% | 4.5% |
| Tax rate | 28.5% | 29.1% |
| Debt/Equity ratio | 1 | 1 |
| After-tax WACC | 6.1% | 7.9% |
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 | $293 | $34,020M | 77.0% |
| 10-Year Growth | $337 | $39,188M | 60.1% |
| 5-Year EBITDA | $224 | $25,697M | 69.6% |
| 10-Year EBITDA | $277 | $32,071M | 51.2% |
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) | 7.9% - 6.1% |
| Enterprise Value | $16,630M - $21,587M |
| Net Debt | $(1,156)M |
| Equity Value | $17,786M - $22,743M |
| Outstanding Shares | 120M |
| Fair Value | $148 - $190 |
| Selected Fair Value | $169.08 |
| Metric | Value |
|---|---|
| Market Capitalization | $19858M |
| Enterprise Value | $18702M |
| Trailing P/E | 11.12 |
| Forward P/E | 10.12 |
| Trailing EV/EBITDA | 6.20 |
| Current Dividend Yield | 0.00% |
| Dividend Growth Rate (5Y) | 0.00% |
| Debt-to-Equity Ratio | 0.96 |
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% | $100.99 |
| Discounted Cash Flow (5Y) | 25% | $73.37 |
| Dividend Discount Model (Multi-Stage) | 20% | $26.74 |
| Dividend Discount Model (Stable) | 15% | $20.05 |
| Earnings Power Value | 10% | $16.91 |
| Weighted Average | 100% | $238.05 |
Based on our comprehensive valuation analysis, Lululemon Athletica Inc's intrinsic value is $238.05, which is approximately 43.7% above the current market price of $165.69.
Key investment considerations:
Given these factors, we believe Lululemon Athletica Inc is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.