Coach’s 3Q17 Earnings Story: Earnings Beat, Revenue Miss



Snapshot of the series

Coach (COH) reported its results for fiscal 3Q17 before the market opened on May 2, 2017. The results relate to the three-month period ending April 1, 2017.

The company reported earnings of $0.46 per share, beating the Wall Street analyst average estimates by $0.02. Coach has not missed the consensus forecasts in any of the past 13 quarters.

It fell short, however, of the top-line expectations. Its revenue fell 3.7% to $995 million, missing Wall Street expectations by $24.8 million. But the handbag retailer reaffirmed its fiscal 2017 earnings and revenue forecasts.

Investors reacted positively to the company’s earnings beat, with the stock price trading higher throughout the day and closing with 11.4% gains at $43.15.

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About Coach

Established in 1941, Coach is a leading luxury fashion and accessory brand. The company’s products target the affordable luxury business and include handbags, watches, footwear and apparel, among other things.

Valuations and recommendations

Coach is currently trading at a one-year forward price to earnings ratio of 19x, as compared to 9.5x, 15.9x, and 20.8x for Michael Kors (KORS), Ralph Lauren (RL), and Kate Spade (KATE), respectively (all information as of November 2, 2016). The mean 12-month price target by 32 analysts covering Coach is $45.05, which suggests the stock could gain about 4% over the next year.

Notably, investors looking to invest in Coach through ETFs can choose to invest in the iShares Morningstar Mid-Cap Value ETF (JKI). Coach has a weight of ~0.8% in JKI.

In this series, we’ll discuss the company’s 1Q17 financial performance and look at its stock performance, target price, and current valuation. We’ll start in the next part (below) with a closer examination of Coach’s top line in fiscal 3Q17.


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