LULU hits a home run

Look at these numbers:

Revenue up 56% Q over Q to 175.8 Million

Earnings per share 0.36 versus 0.20 year ago quarter

Same store sales up 29%

Said earnings will rise 46% to 48% for fourth quarter

The market is really paying up for growth and this is one we will add to in size when it settles down.

Lesson – Remember the Price to Earnings ratio?  It means nothing when they only care about the future earnings power of a company.  My calculations show a “P/E” of around 44.  A value player would say that is too rich.  We know that what looks too expensive usually just gets more expensive leaving others in the dust.  When a stock hits new highs into earnings, many insiders already know the earnings are going to be great and tell their ants, uncles, sisters and cousins to buy the stock too and that helps drive the price up.

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