This score-card analysis attributes an Overall Score to a company by analyzing several aspects that I consider to be among the most important.
In summary, a company to have an overall score close to 100% must have the following characteristics:
- Report high growth rates in the last 3 years (and in the last quarter) in terms of Revenue, Gross Profit, Operating Income and Net Income. Furthermore, it must operate with high and improving margins in recent years.
- Analysts expect Earnings Per Share (EPS) and revenues to grow in the short term (in the next quarter) and in the medium to long term (in the next 5 years). Moreover, they expect the company to be undervalued at current prices and in the last quarter their EPS expectations must have been beaten with a consequent rise in share prices.
- The stock price of the company must have outperformed the S&P 500 index and in the last 3 months the Hedge Funds and Insiders bought shares in the company.
The overall score ranges from 0% (if the characteristics listed above are all very negative) to +100% and it is unlikely that there will be a company with a +100% score because the requirements for achieving this score are very high, however a score higher than +70% can be considered good.
This analysis alone is not enough to decide whether or not to invest in a company because it does not provide indications on the timing of entry, but it is a good starting point.
Lululemon Athletica Inc. (LULU)
- Overall Score: +83%
- Excellent growth for LULU in the last 3 years
- Revenue + 74%
- Operating and Net Income doubled
- Operating and net margins improved by around 20%
- Analysts expect annual long-term EPS growth of 19%
- Great last quarter
- Revenue + 22%
- Net Income + 30%
- YTD performance: +65% vs +19% (S&P500 index)
Lululemon Athletica inc., is a Canadian athletic apparel retailer. Founded in Canada as a yoga wear retailer, Lululemon has expanded to sell its products internationally in 460 stores and online. The company has expanded to make a variety of types of athletic wear, including performance shirts, shorts, and pants, as well as lifestyle apparel and yoga accessories.
The overall score of LULU is +83% .
In the last 6 months, LULU has overperformed the S&P500 index by 15,3% and analysts believe the company is undervalued by 4,9% .
In the last quarter, the company reported revenues of 883,4 million, up by 22,1% compared to the same quarter 12 months earlier. Revenue TTM (Trailing-12-Months) are equal to 3580,9 million, up by 73,8% in the last 3 years.
LULU reported an operating income of 168 million in the last quarter, an improvement of 25,2% compared to the same quarter 12 months earlier, also reporting an improvement of 2,5% in the operating margin. Considering the sum of the last four quarters (TTM), LULU reports an operating income of 764,1 Million , a growth of 107,0% compared to three years ago and an improvement of 19,1% in the operating margin.
LULU reported a net income of 125 million in the last quarter, an improvement of 30,5% compared to the same quarter 12 months earlier, also reporting an improvement of 6,9% in the net margin. The TTM net income is 542 million , a growth of 103,8% compared to three years ago and the net margin has improved by 17,2% .
In the next quarter, analysts expect growth in EPS (Earnings Per Share) of 24,0% and a growth in revenue of 19,9% . Furthermore, they expect an annual growth of LULU EPS by 19,3% for the next 5 years.
In the last quarter, LULU reported better EPS than analysts’ expectations and the stock price reacted by increasing by 7,8% .
Finally, in the last 3 months the Hedge Funds have increased their positions by 18.1k shares. The Insiders have sold shares worth $79.4M .
This analysis gives you a general idea of whether a company is good or not, but you may also be interested in finding potential entry points, so I am waiting for you here to know about the best chart patterns of today.
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Sources & additional info
*The comparison with the S&P 500 index is visible inside the graph.
*Data updated to the last quarterly report available
*Data in Millions of Dollars
*Data from zacks.com, tipranks.com, reuters.com, finance.yahoo.com
*Company information from wikipedia.com
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DISCLAIMER: The information in this blog post represents my own analysis/opinions and does not contain a recommendation for any particular security or investment.