Snapshot of the series
New York–based Kate Spade (KATE) reported its 4Q16 results on February 16, 2017. The company’s earnings per share stood at $0.41, $0.06 more than Wall Street analysts’ consensus estimate.
KATE’s revenue rose 10% to $471 million in the quarter, but it fell $1.1 million short of analysts’ consensus estimate.
The company’s stock spiked 15% after it reported its earnings. The surge was likely the result of KATE’s management’s confirmation that it would be pursuing strategic alternatives.
Continue reading this four-part series to learn more about the company’s 4Q16 performance, the announcement of its strategic review, and its stock market performance.
About Kate Spade
Kate Spade is a designer and manufacturer of apparel, women’s handbags, and fashion accessories. The company primarily operates under two lifestyle brands: Kate Spade New York and Jack Spade.
Jack Spade offers fashion products for men, while Kate Spade New York sells apparel and accessories for women and children, as well as home products. The company also owns Adelington Design Group, a private brand jewelry design and development group.
ETF investors seeking to add exposure to KATE can consider the iShares Morningstar Small-Cap Growth ETF (JKK) which invests 0.5% of its portfolio in the company.
Valuation update and stock recommendation
KATE is currently valued at a one-year forward price-to-earnings ratio of 26.7x. It’s trading at a premium to its handbag peers Michael Kors (KORS) and Coach (COH), which are valued at 9.5x and 17x, respectively, as of February 16, 2017.
The company is covered by 20 Wall Street analysts, who have jointly rated it as a 2.2 on a scale of 1 (strong buy) to 5 (strong sell). It has a better rating than KORS’ 3.0 and COH’s 2.3.
Read the next article to know more about the company’s strategic review announcement and its stock market performance.