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What You Need to Know about Michael Kors's Fiscal 2Q18 Results

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What You Need to Know about Michael Kors's Fiscal 2Q18 Results PART 1 OF 5

Michael Kors Beats Fiscal 2Q18 Earnings and Revenue Estimates, Raises Guidance

Snapshot of the series

New York-based Michael Kors Holdings Limited (KORS) reported its fiscal 2Q18 results on Monday, November 6, 2017. The results relate to the three-month period ending September 30, 2017.

As in fiscal 1Q18, the company did better than the Wall Street expectations on both top and bottom lines. EPS (earnings per share) stood at $1.33—50 cents more than the Wall Street estimate. Revenues rose 5.4% YoY (year-over-year) to $1.5 billion, beating the consensus by $100 million. Kors also raised its guidance for fiscal 2018.

Michael Kors Beats Fiscal 2Q18 Earnings and Revenue Estimates, Raises Guidance

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Notably, the company’s stock price has now surged close to 15%, hitting its 52-week high on November 6.

About Michael Kors

Established in 1981, Michael Kors operates as a luxury fashion brand that designs and sells handbags, ready to wear apparel and fashion accessories. The company primarily markets under three brands—MICHAEL Michael Kors, Michael Kors Collection, and Michael Kors Mens lines—either directly or through licensing partners.

As of September 30, 2017, the company operated 843 retail stores retail stores, including concessions in more than 100 countries.

Valuations update and stock recommendation

KORS is currently trading at a one-year forward PE (price-to-earnings) ratio of 13.8x, compared with its three-year average of 11.2x. The company is trading at the upper end of its 52-week PE range of 8.8x at 14x. Rival Tapestry-Coach (TPR) is trading at a premium to KORS. The company is valued at 16.3x the next 12 months’ earnings.

KORS is also trading at a discount to several other apparel and accessories stocks. PVH Corp (PVH), VF Corp (VFC), and Ralph Lauren (RL) are trading at 14.8x, 21.0x, and 15.2x, respectively.

ETF investors looking for exposure to KORS can consider the iShares Edge MSCI Multifactor Consumer Discretionary ETF (CNDF), which invests 1.95% of its portfolio in the company.

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