Understanding Coach’s Stock Jump after Its Latest Earnings Beat


May. 5 2017, Updated 7:36 a.m. ET

Coach’s stock surges after 3Q17 earnings beat

Coach’s (COH) stock price rose 11.4% to $43.15 after it reported its results on May 2. The company is currently sitting on a YTD (year-to-date) profit of 23% and is among the best-performing apparel and accessory stocks this year.

By comparison, handbag peers Michael Kors (KORS) and Kate Spade (KATE) have fallen 12% and 9.5% YTD, respectively. Apparel companies Under Armour (UAA), Lululemon Athletica (LULU), and Ralph Lauren (RL) have fallen 27%, 20%, and 11%, respectively.

The S&P 500 Apparel and Accessories Index has fallen ~1% YTD, while the S&P 500 Index (SPX) has gained around 6.8%.

Notably, investors looking to invest in Coach through ETFs can choose to invest in the PowerShares S&P 500 High Dividend Low Volatility Portfolio (SPHD). Coach has a weight of ~2.3% in SPHD.

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Ratings and recommendations

Coach is covered by 32 Wall Street analysts. Of these, 63% analysts have recommended a “buy,” while 34% have recommended a “hold,” and 3% have given a “sell” rating on the stock. By comparison, 4% and 0% of analysts have recommended a “sell” for Michael Kors and Kate Spade, respectively.

Coach now has a consensus rating of 2.2 from Wall Street analysts, which is better than Michael Kors’s rating (3.0) but worse than that of Kate Spade (2.4.). These ratings are done on a scale of 1 (strong buy) to 5 (strong sell).

Valuations summary

Coach is currently trading at a one-year forward price to earnings ratio of 18.8x, which is in line with its three-year average of 18x. The stock is thus trading at a premium to Michael Kors and Ralph Lauren, which are valued at 9.5x and 15.9x, respectively.

Kate Spade, however, is valued higher at 20.8x.

Notably, Coach made a bid to purchase Kate Spade in March 2017.


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