Lululemon Athletica (NASDAQ: LULU) reported a disappointing second-quarter financial update, causing shares to plummet by 19% the next day. The stock is now selling at a discount with a price-to-earnings ratio of 14, 44% lower than the S&P 500. Despite recent struggles, Lululemon remains profitable with strong margins.

In the past five years, Lululemon stock has dropped by 53%, trading 67% below its peak. However, the company still sees growth potential with plans to open 40 to 45 new locations in fiscal 2025, especially in China where same-store sales grew by 17% in Q2. Lululemon currently has 784 stores.

Although Lululemon’s stock price has fallen, the company remains profitable and sees growth potential ahead. Despite facing competition and macroeconomic challenges, Lululemon’s strong margins and expansion plans in China indicate reasons for optimism. The stock is positioned for potential growth despite current market conditions.

Read more at Yahoo Finance: 1 Reason Every Investor Should Know About Lululemon (LULU)