Analysts predict a resurgence for value stocks in 2026, with Lululemon Athletica (LULU) emerging as a potential turnaround candidate. Despite a challenging period marked by declining earnings and leadership changes, Lululemon’s stock has fallen 68% from its late 2023 high, presenting a compelling entry point for investors. The company’s international sales, particularly in China, grew significantly, indicating strong brand resonance outside North America.
While management forecasts continued sluggish growth, with revenue expected to rise only 2% to 4% and EPS projected to decline by 8%, there are positive indicators. Lululemon is enhancing its North American strategy by reducing inventory markdowns, improving the store experience, and innovating product offerings. The brand’s strength and ongoing international expansion could offset domestic challenges, making it a noteworthy consideration for portfolio diversification.
Investors may find value in Lululemon’s current pricing, trading at just 13.5 times projected EPS, suggesting that a rebound could be on the horizon as the company revitalizes its growth strategy.
Source: fool.com