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Good day subscribers thank you so much for joining me today i am jeremy this is the financial education channel in today we’re going to take a look at lululemon stock a canadian company i had one of my canadian viewers this past week suggest i do something like canadian stock related for the canadian viewers that i was like i don’t think i’ve ever done something
Like that before and you canadians represent on the channel you’re the second biggest market for my channel so i figured why not why not do it and i happen to be looking at lululemon at the same exact time which is a canadian company so i’m like why not do a video about my favorite canadian company at the moment which is lululemon guys so we’re gonna look at this
One we’re gonna see kind of why i’m looking in this one i’m not invested in yet but i’m seriously looking into it and i kind of like what they got going on so the first off we’re looking in the lululemon because they caught my eye last week because their stock dropped like a rock we stopped their stock drop like over 20 percent this past week i saw that i think
Cnbc and other publications and whatnot i think i even covered in my stock market recap video so i was like i gotta look into this one i gotta look into and see see what’s going on over there and sudden the company i kind of like so for those of you guys who do not know what lululemon is i’m on their 10k i’m in their annual report 10k which is on their investor
Relations page and this basically talks about their their business or healthy lifestyle inspired athletic apparel is marketed under the lululemon in aviva brand names we offer comprehensive line of apparel and accessories for women men men now and female youth our apparel assortment includes items such as pants shorts tops jackets designed for healthy lifestyle
And athletic activities such as yoga running training and most other sweaty pursuits so lululemon started out as basically just a yoga pant company that’s like their thing that was their thing they just started out as yoga pants basically and they kind of like helped start the whole trend of like yoga pants and now some like everybody wears like super there are
Not everybody but i like a lot of women and girls even wear like these super tight yoga pants and they kind of help start the whole tray but their business has evolved now and now they don’t just sell pants they sold you know tops they sell jackets they sell even some men’s clothes now so they’re they’re diversifying their business off of they started in a niche
Which every single athletic company that’s ever been successful starts in a niche and then starts to bring its way out if you followed under armour in the early days what they their niche was was basically for football players baseball players and stuff like i remember in high school under armour’s was kind of coming around and whatnot and like a you were a cool
Guy if you had like the under armour shirt and whatnot that was like super tight it like somehow took moisture away from your body and stuff like that like that’s how under armour started nike they started this basically attraction you know for running and whatnot now look at their global brand one of the biggest in the world so a lot of athletic companies have
Started just the niche and then they branch out and branch out and that’s where lululemon just starting to branch out now so when i look at lululemon here this is a company operated stores i’m strolling their annual report which is on their investor relations page and i see that they they’re big in the united states and it’s still not that big i mean 245 stores is
Not a lot and then they have 51 stores in canada 27 stores in australia and virtually almost non-existent in europe almost non-existent in asia so i look at that and i say okay this company definitely has room to expand in the us they definitely have they have a massive amount of room to expand in europe they have barely even gotten going there they have massive
Amount of room to expand in the asian countries so right now i’m looking at this and i see a company that five 10 years from now as long as they can manage the brand well they can definitely build out this company way way way bigger than it is i mean look at they have three stores in hong kong and three stores in china like there and they’re non existent basically
In asia right now so they’re just trying to get there they’re us built up and i am i agree with that you know you got to get the u.s. built first because that’s where you know i mean they’re a canadian company but there’s still north american company in the end you gotta get the us built up get more of a brand name here and then expand more into your then expand
More into china last in asia in general when you’ve got your big brand name and it’s kind of more of a global story at that point so i look at that and i got a lot of growth ahead of them as long as they can manage a brand properly now let’s talk about some competition here so competition in the athletic apparel industry is principally on the basis of brand image
And recognition as well as product quality innovation style distribution price so they got a lot of competitors we go down next paragraph we are in direct competition with wholesalers and direct sellers of athletic apparel such as nike adidas under armour they even compete a little bit with the gap who has an athletic a brand it’s cold they compete a little bit
With l brands who owns victoria’s secret because victoria’s secret and painfully trying to do some things like that so it’s a very competitive spacer and they got a lot of indirect competitors and they got a lot of direct competitors and then you’ve got a lot of knockoff products now i mean yoga pants you know and those tights and stuff you can get those at walmart
And target now like you used to be like you had to go to one of these higher end stores now you can get it it’s like a dime a dozen of course their quality i’m sure is much different and that’s something i still don’t look into i got to actually visit these stores and talk to people that are you know customers of lululemon why do they like it and things like that i
Still got to do all that but i’m sure their quality is better than a walmart one or target one things like that and that’s why they deserve a higher price and i’m sure they’re more stylish and things like that so a lot of competition though we can not deny that and you know a stock like under murr has been beaten down to a pulp so far this year so this this stock
Is not the only stock that’s down pretty big so far this year as far as in the space now we look at their last three years of revenue which i love to look at when i’m looking into a company 2015 2016 2017 check out this so they were just around 1.8 billion dollars in revenue they did in 2015 then they did two billion dollars in 2016 and this past year the quarter
Into january 2017 they did 2.3 billion dollars so it’s not like you know blow me away type growth but it certainly has nice growth then we look at net income is grown very nice 239 million mm the in 2015 or the year-end it 2015 and 2016 266 million this past year they did 303 so there’s nice growth i mean you you look at this company and it’s growing nicely it’s
Not a gangbuster growth like palm knock me out big thing but revenue is growing nice and net income growing phenomenally and this company made over 300 million dollars profit last year so very very impressive for this company so now we look at this balance sheet holy smokes what a great balance sheet this is my type of balance sheet right here they have 734 million
Dollars in cash right and then they basically have no debt their debt is non-existent so they got three-quarters of a billion dollars in cash just sitting around that’s my type of balance sheet this is a company that’s very safe to invest in because even if they come on spawn some hard times they’re loaded up with cash like an insane amount guys so very happy to
See that it’s very good and that definitely gives them a lot of cash to help expand this business around the united states and then over into europe and then more into asia and things like that guys and maybe do some commercials advertising they got plenty of money around there plenty profitable and made over three hundred million dollars last year so now this
Let’s look at this quarter which is why their stock dropped like a rock the other day so this quarter wasn’t that bad and i mean net revenues increased 12% and first to 789 million from 704 million the previous year total comparable store sales which included comparable store sales and direct-to-consumer increased 8% or 7% on a constant dollar basis that’s very
Impressive guys an eight percent that’s anybody knows anything about retail that’s a high high number and then we look at you know direct-to-consumer net revenue increased twelve percent gross profit increased 21 percent to 427 million man income from operations increased 18% just a lot of very impressive stuff the new earnings per share were 99 cents compared
To 85 cents the previous year which is impressive after impressive number but where the quarter kind of came into question was the 2017 outlook but specifically the q1 outlook which was kind of porous here whoo guys so for the first first quarter fiscal 2017 we expect net revenues to be in the 510 million to 515 million range based upon to pull comparable store
Sales decrease in the low single digits on a constant dollar basis basis diluted earnings per share expected to be 25 to 27 cents and blah blah blah so basically and then for full fiscal 2017 we expect net revenues to be in the range of two point five five to two point six billion and total comparable store sales increase in the low single digits so for the whole
Year that expected into the growth for certainly too slow but q1 actually they’re expecting and bad like negative growth they’re expecting comparable store sales to be down just a little bit guys so it kind of goes from company that’s growing revenues at like a twelve percent clip to mountain now maybe growing at a one to maybe a three percent clip because they
Said low single digits are expecting growth for 2017 so that means one two or three percent so a big slowdown and growth and that’s what i stock got hammered this week but at the same time you know so a good company it’s very profitable still so let’s look at some metrics here the market cap on this company is around six point eight two billion dollars they have
About three quarters of a billion dollars in cash so basically them that makes them market cap around on a six billion dollar market cap if you subtract the cash from the market cap and they got a trailing p/e of 20 for a forward p/e of just under 19 so i look at this stock and i like it a lot i’m not investing in it yet but it definitely has my attention what
I’m gonna do now is i’m going to look into i’m gonna actually go literally to some stores i’m gonna try to see some customer reviews i’m gonna try to see some product reviews i’m trying to watch watch some user behavior and find some people that actually wear lululemon clothes and things like that and and see why they’re passionate around the brand why they like
Those clothes the best you know things like that i’m gonna try to really deep dive research things that just aren’t on the financial metrics i mean and you can only get so much as an investor from looking at the metrics right right now i’m like this i’m very excited about this but i got it i gotta do more research i got to do more research into this company in
That that doesn’t have to do anything with numbers more like feelings more like actually talking to customers things like that guys actually visiting stores actually seeing the product quality product tracing because i don’t even have a clue what their yoga pants are priced at they could be priced at $800 they could be priced at $80 i don’t know so i got a look
Into all that stuff guys but right now it definitely has my attention it’s definitely my favorite canadian stock at the moment and whether i’ll be buying it we’ll just have to see in the future guys so i hope you enjoyed this day hit that thumbs up button if you enjoyed let me know in that comment section if you there’s any specific stock stock to you guys would
Love to see broken down and if someone he suggests a stock that on there and you’d like that same stock you can just leave that comment a thumbs up whatever one they suggest guys so anyways i hope you enjoyed the stay if you just came across the channel you may want to subscribe we talk personal finance we talk entrepreneurship we talk the stock market than most
Of anything thank you for watching guys and have a great day
Transcribed from video
My favorite Canadian Stock! Is Lululemon a BUY? By Financial Education