lululemon athletica inc. (LULU) is Attracting Investor Attention: Here is What You Should Know

LULU is down 9.3% over the past month, lagging the S&P 500, and the estimate picture suggests the pressure may not be finished. Zacks Investment Research now rates the stock Rank #5 (Strong Sell), its most bearish designation, which signals expected underperformance versus the broader market in the near term.

The rating rests on earnings expectations. Consensus calls for LULU earnings to fall 28% in the current fiscal year, followed by a further 9.7% decline in the next fiscal year. Two consecutive years of shrinking profits is a meaningful drag on the growth narrative that typically supports a premium multiple.

Valuation offers the one counterweight. Zacks assigns LULU a B valuation grade and describes the stock as trading at a discount to peers. Interpretation: the market has already marked down the shares, but a cheaper multiple on falling earnings can reflect a deteriorating base rather than a bargain. Cheap on estimates that are still being cut is not the same as cheap on estimates that have bottomed.

The setup pits momentum and estimate revisions, both negative, against a relative-value argument. Rank #5 is built on estimate direction, so the stock's trajectory hinges on whether those forecasts stabilize.