Lululemon Athletica inc. (LULU): Is this Stock a Downward Dog?

Rival NIKE, Inc. (NYSE:NKE) is the “god of victory” of athletic shoes and apparel. Its brand name alone is valued at a whopping $10.7 billion, making it the most valuable brand among sport businesses. Its Oregon-based headquarters is in itself an empire. Nike’s iconic “swoosh” logo, “Just Do It” motto, sponsorship of elite athletes, and team apparel have helped the company grow into a $48 billion-plus revered behemoth.

Also giving Lululemon a run for the money is Under Armor Inc (NYSE:UA).  The Baltimore-based athletic apparel maker just posted healthy Q4 results that spiked 51% from the same quarter a year ago. Gains came from all segments. The company guided higher for all of 2013, projecting gains up some 20%-21%.

Meanwhile, Lululemon has not shown much growth in capital returns over the last three years, with profit margins remaining flat over the same period. Revenue and growth rates have fallen precipitously since fiscal 2010. Growth estimates for the next two fiscal years also point downward.

So it looks like Lululemon is posed—er—poised for a rough couple quarters.

When life gives you lemons, the enterprising lot makes lemonade. But LULU’s management has not yet addressed how it plans to the right the slide. As a result, shareholders may well remain thirsty for growth in the near future.

The article Is this Stock a Downward Dog? originally appeared on Fool.com and is written by Diane Alter.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.