Is lululemon athletica, Inc. overvalued or undervalued?

As of 17 October 2025, lululemon athletica, Inc. has moved from fair to attractive in its valuation grade, indicating a shift towards being undervalued. The company appears to be undervalued based on its valuation ratios, including a P/E ratio of 18, an EV to EBITDA of 11.20, and a PEG ratio of 1.03. In comparison to peers, lululemon's P/E ratio is significantly lower than eBay, Inc., which has a P/E of 70.51, suggesting that lululemon may be a more attractive investment relative to its industry.
Despite the attractive valuation metrics, lululemon has underperformed compared to the S&P 500 in recent periods, with a year-to-date return of -56.22% versus the S&P 500's 13.30%. This stark contrast in performance reinforces the notion that lululemon may be undervalued, as its current stock price does not reflect its strong financial metrics, such as a ROCE of 73.99% and ROE of 42.88%.