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Why Deutsche Bank Reduced Ralph Lauren’s Price Target to $6.38

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May. 16 2016, Published 12:35 p.m. ET

Price movement of Ralph Lauren

Ralph Lauren (RL) has a market cap of $7.3 billion. It fell by 1.6% to close at $85.50 per share on May 13, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -5.1%, -7.6%, and -22.9%, respectively, as of the same day. This means that RL is trading 7.8% below its 20-day moving average, 9.5% below its 50-day moving average, and 19.7% below its 200-day moving average.

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Related ETFs and peers

The First Trust Large Cap Value AlphaDex ETF (FTA) invests 0.62% of its holdings in Ralph Lauren. The ETF tracks an index that selects and weights value stocks from the S&P 500 Value Index using fundamental factors, including sales, book value, and cash flows. The YTD price movement of FTA was 1.8% as of May 13, 2016.

The market caps of Ralph Lauren’s competitors are as follows:

  • VF Corporation (VFC) — $25.4 billion
  • HanesBrands (HBI) — $10.2 billion
  • PVH Corporation (PVH) — $6.8 billion

Deutsche Bank reduced Ralph Lauren’s price target

Deutsche Bank has reduced the price target for Ralph Lauren to $6.38 from $6.49. It has a “hold” rating for the company.

TheStreet Ratings has rated Ralph Lauren as “hold” with a score of C.

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Performance of Ralph Lauren in 4Q16 and 2016

Ralph Lauren reported fiscal 4Q16 net revenues of $1.87 billion, a fall of 0.74% compared to net sales of $1.88 billion in fiscal 4Q15. Net revenues from its wholesale segment fell by 6.5%, and sales from its retail and licensing segments rose by 5.7% and 8.1%, respectively, in fiscal 4Q16 over fiscal 4Q15. The company’s cost of goods sold as a percentage of net revenues rose by 2.7%. Its operating income fell by 64.7% in fiscal 4Q16 over 4Q15.

RL’s net income and EPS (earnings per share) fell to $41 million and $0.49, respectively, in fiscal 4Q16, compared to $124 million and $1.41, respectively, in fiscal 4Q15.

Fiscal 2016 results

In fiscal 2016, RL reported net revenues of $7.4 billion, a fall of 2.8% YoY (year-over-year). It reported impairment of assets and restructuring and other charges of $49.0 million and $143.0 million, respectively, in fiscal 2016. This compares to $7.0 million and $10.0 million, respectively, in fiscal 2015.

Its net income and EPS fell to $396 million and $4.62, respectively, in fiscal 2016, compared to $702 million and $7.88, respectively, in fiscal 2015.

Ralph Lauren’s cash and cash equivalents fell by 8.8%, and its inventories rose by 8.0% in fiscal 2016. Its current ratio fell to 2.5x, and its debt-to-equity ratio rose to 0.66x in fiscal 2016, compared to a current ratio and debt-to-equity ratio of 2.8x and 0.57x, respectively, in fiscal 2015.

Now let’s take a look at B&G Foods.

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