Tapestry’s 1Q18: Earnings Beat, Revenue Miss, Guidance Affirmed
Snapshot of the series
The New York–based Tapestry (TPR) reported its results for the first quarter of 2018 before the market opened on November 7. The results relate to the three-month period ended September 30.
The company reported adjusted diluted earnings of 42 cents per share, beating Wall Street’s average earnings estimates by six cents. However, Tapestry once again fell short of top-line expectations. Revenue rose 24% YoY to $1.29 billion, missing forecasts by $10 million.
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Victor Luis, CEO of Tapestry, commented, “Our first quarter performance was in line with our expectations, reflecting the benefits of our diversified multi-brand model, notably the contribution of Kate Spade to our consolidated results and double-digit growth at Stuart Weitzman.”
Read through this four-part series to learn more about the company’s 1Q18 performance, its stock market performance, and recent analyst action.
Established in 1941, Tapestry is a leading luxury fashion and accessory brand. The company changed its name from Coach to Tapestry last month to reflect the multiple brands under its umbrella—including Coach, Kate Spade, and Stuart Weitzman. The company acquired leading handbag maker Kate Spade in May. It acquired Stuart Weitzman, a premium footwear company, in 2015.
Valuations update and stock earnings potential
Tapestry is currently trading at a one-year-forward price-to-earnings ratio of 16.3x versus a three-year average of 18.3x. It trades at a premium to handbag rival Michael Kors (KORS), which is valued at 13.8x.
However, Tapestry’s valuations are more appealing than Kors’s, as the company has better near-term earnings potential. Its earnings per share are projected to rise ~16% over the next year, compared to a 13% fall in Michael Kors’s profits.
Investors looking to invest in TPR through ETFs can choose to invest in the WisdomTree MidCap Dividend Fund (DON). TPR has a ~0.9% weight in DON’s portfolio.