Lululemon (LULU) Doing Laps Around Nike (NKE), Better Growth Story - Cramer
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Lululemon (Nasdaq: LULU) shares are trading higher today, following some bullish comments from Jim Cramer late Friday.
Cramer compared lululemon to Nike (NYSE: NKE) following both companies quarterly earnings report. He noted that lululemon took analysts to the cleaner while Nike failed to meet expectations. Revs for lululemon jumped 52 percent in the quarter, compared to just a seven percent increase for Nike.
Continuing, Cramer points out that Nike "just isn't growing like we once thought." Comparably, lululemon is a "high octane" secular growth story which has done so mostly through word of mouth.
Cramer also noted that Nike is showing signs of becoming a cyclical company.
Lululemon's limited exposure, with just 187 stores throughout the U.S. and Canada, makes it less vulnerable to economic pressures. Lululemon is planning to expand its store count by about 185 in 2011.
Margins are better at lululemon as well. Profit margins for lululemon increased to 58.5 percent last quarter, compared to 45.8 percent at Nike, which was 110 basis points lower from the same period last year.
Though Nike is trading at a lower P/E when compared with lululemon, 18x versus 37x, it commands only an 11 percent growth rate, compared with 25 percent at lululemon.
Cramer also notes that there is plenty of room for upgrades on lululemon, with only ten analysts rating shares a Hold with one at Sell.
Lululemon is up 4.8% on the day, and Nike is down 0.9%.
Cramer compared lululemon to Nike (NYSE: NKE) following both companies quarterly earnings report. He noted that lululemon took analysts to the cleaner while Nike failed to meet expectations. Revs for lululemon jumped 52 percent in the quarter, compared to just a seven percent increase for Nike.
Continuing, Cramer points out that Nike "just isn't growing like we once thought." Comparably, lululemon is a "high octane" secular growth story which has done so mostly through word of mouth.
Cramer also noted that Nike is showing signs of becoming a cyclical company.
Lululemon's limited exposure, with just 187 stores throughout the U.S. and Canada, makes it less vulnerable to economic pressures. Lululemon is planning to expand its store count by about 185 in 2011.
Margins are better at lululemon as well. Profit margins for lululemon increased to 58.5 percent last quarter, compared to 45.8 percent at Nike, which was 110 basis points lower from the same period last year.
Though Nike is trading at a lower P/E when compared with lululemon, 18x versus 37x, it commands only an 11 percent growth rate, compared with 25 percent at lululemon.
Cramer also notes that there is plenty of room for upgrades on lululemon, with only ten analysts rating shares a Hold with one at Sell.
Lululemon is up 4.8% on the day, and Nike is down 0.9%.
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