Is lululemon athletica inc. (LULU) overvalued or undervalued?
Updated Nov 10, 2026 · hand-researched model · educational, not advice
At a recent price of $112.53, lululemon athletica inc. (LULU) sits below every lens we ran: our valuation lenses put the business somewhere between $126.92 and $227.39 per share. For a cyclical we value through the cycle we publish a range only (peer multiples and our researched mid-cycle DCF): where in the cycle the business sits decides where in that range it lands, and a single figure would claim we know that precisely. This is an educational model, not a price target or a recommendation.
The valuation discounts lululemon athletica inc.'s projected free cash flows at a weighted-average cost of capital (WACC) of 10.7%, with a long-run terminal growth rate of 2.5%. About 71% of the enterprise value comes from the terminal value — the portion beyond the explicit forecast window — which is typical for a stable, cash-generative business and a reminder that small changes in the discount rate or terminal growth assumption swing the intrinsic value meaningfully.
Running the DCF in reverse — solving for the growth the current price already assumes — the market is implying roughly -10.1% annual revenue growth for LULU. Our base case instead compounds to about 0.5% a year over the same forecast, so the market is pricing in slower growth than our base case. The reverse-DCF is a quick sanity check: it reframes 'is this stock cheap?' as 'do I believe the growth the price requires?' rather than arguing over a single point estimate of fair value.
Sensitivity matters more than any single number. Across a reasonable band of discount-rate assumptions, LULU's modeled DCF value ranges from about $101.95 to $173.41 per share. If that range still sits below today's price, the market is optimistic relative to the model across the whole band; if it brackets the price, the stock is roughly fairly valued on our assumptions. Use the interactive slider to see exactly where your own cost-of-capital view lands.
How to read this page: the DCF fair value is what lululemon athletica inc. would be worth if its cash flows grow as modeled and are discounted at the stated WACC. The assumptions table shows every input and its source; the reverse-DCF shows what the market believes; the sensitivity band shows how fragile the answer is. None of this is investment advice — it is a transparent, auditable framework for forming your own view of LULU's intrinsic value. Figures update as new filings and prices come in.
The assumptions behind LULU's DCF
| Input | Value | Source |
|---|---|---|
| Base-year revenue | $11,102,600,000 | lululemon FY2025 10-K (accession 0001397187-26-000020, filed 2026-03-17): us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax, fiscal year 2025-02-03 to 2026-02-01: $11,102,600K. +4.9% on FY2024's $10,588.1M, which was a 53-WEEK year; the Q4 release (8-K Ex-99.1, 2026-03-17) puts growth ex the 53rd week at +7% (+6% constant dollar). The mix inside that number is the story: Americas -1% (comps -3%), International +22%. CROSS-CHECK, TTM to 2026-08-02: H1 FY2026 revenue $4,887.2M vs $4,895.9M in H1 FY2025 (-0.2%), so TTM revenue is $11,093.9M — essentially flat on the base. The decline is all ahead: Q2 was -4% and the guided second half is ~-11% (see forecast). |
| Base EBIT margin | 19.9% | lululemon FY2025 10-K (accession 0001397187-26-000020, filed 2026-03-17): us-gaap:OperatingIncomeLoss FY2025 $2,210.6M / revenue $11,102.6M = 19.91% (the Q4 release states 19.9%, down 380bp YoY). GAAP, no adjustments: FY2025 carries no impairment or restructuring line (the last was the $74.5M Mirror write-off in FY2023) and only $15.2M of executive-transition cost, so there is nothing to normalize. LEASES: operating lease cost of $406.0M sits INSIDE this EBIT as rent, which is why lease liabilities are kept OUT of net debt — one treatment, applied on both sides. The 10-K attributes the 380bp drop mainly to US tariffs and the de minimis removal (unmitigated gross-profit hit ~$275M, ~2.5pp) plus markdowns. CROSS-CHECK, TTM to 2026-08-02: EBIT $1,978.8M (= $2,210.6M + H1 FY26 $730.6M - H1 FY25 $962.4M) on $11,093.9M = 17.8%, or 16.6% without the one-time $134.5M IEEPA tariff refund booked in Q2 FY26. THIS BASE YEAR IS THE PEAK THE MODEL MEASURES AGAINST — the forecast does not return to it. |
| Forecast revenue growth | -6% → -3% → 4% → 4% → 4% | Assumption — TickerWorth's 5-year explicit forecast |
| Risk-free rate | 5.2% | US 10Y Treasury constant maturity (FRED DGS10): 5.24% on 2026-10-01, the latest published observation. House input shared by every model in this tracker. |
| Beta | 1.10 | Assumption — normalized estimate (published LULU beta 0.864; peer betas from the same yfinance feed, read 2026-10-03): Published 5Y-monthly beta is 0.864. NORMALIZED UP to 1.10, which is CONSERVATIVE: it raises the discount rate (cost of equity 9.56% -> 10.74%) and LOWERS the value, by about $20/share. Reason: 0.864 is below every large athletic-apparel peer on the same feed at the same time — Nike 1.11, Deckers 1.15, adidas ADR 1.19 (and Abercrombie 0.97, Under Armour 1.62, Gap 2.06, On 2.08) — and a 60-observation monthly regression carries a standard error of roughly 0.2-0.3, so a single company's figure is a noisy read of an industry exposure. LULU has no debt, so its equity beta IS its asset beta and can be compared directly with Deckers (also debt-free) at 1.15. 1.10 is the large-cap brand cluster (Nike/Deckers/adidas ~1.1-1.2), shaded slightly toward LULU's own figure. A discretionary brand whose US comps just fell 12% is not a below-market-risk asset. Using the published 0.864 instead gives $146.90/share. |
| Terminal growth | 2.5% | Assumption — house default: House default 2.5% (roughly long-run nominal GDP), kept for comparability. Must stay below the 10.74% WACC; it does with a wide margin. Not generous for a global brand still opening stores internationally, but this model has just watched the brand's home market shrink 8% in a quarter, so no premium is taken. |
| Diluted shares | 113M | lululemon Q2 FY2026 10-Q (accession 0001397187-26-000127, filed 2026-09-03): Q2 FY2026 weighted-average diluted shares 112,919K (includes the exchangeable shares). DELIBERATELY CONSERVATIVE because buybacks are running hard: the count was 119.7M a year earlier, 2.7M shares were repurchased in Q2 alone ($330.0M), and by 2026-08-28 economic shares were 110.71M (105,594,064 common + 5,115,961 exchangeable). Using that period-end count would add ~2% (~$2.50/share). No credit is given for FUTURE buybacks — they spend free cash flow the model already counts. $712.5M of authorization remained at 2026-08-02. |
| Market price | $112.53 | Delayed quote · as of 2026-11-10 06:04 UTC |
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