1Q18: Will Michael Kors Post another Weak Quarter?



Snapshot of the series

Michael Kors Holdings Limited (KORS) is slated to report its 1Q18) earnings results on Tuesday, August 8.

As per Wall Street expectations, the company’s earnings are predicted to fall 29.5% YoY (year-over-year) to 62 cents per share. Total sales are likely to contract 7% YoY to $991 million, which would be the fourth consecutive quarterly decline in KORS’ top line.

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Valuations update and stock recommendation

KORS is currently trading at a one-year-forward price-to-earnings or PE ratio of 10.2x versus a three-year average of 11.7x. It’s trading close to the upper end of its 52-week PE range of 8.8x to 11.2x.

The company continues to trade at a discount to handbag rival Coach (COH) at 20x as well as other apparel and accessories stocks PVH (PVH) at 15.4x, VF Corp (VFC) at 20x, and Ralph Lauren (RL) at 16x.

About Michael Kors

On July 25, Michael Kors announced its intention to acquire Jimmy Choo (CHOO) for $1.2 billion or 896 million pounds. Jimmy Choo is a premier luxury footwear and accessories brand with strong presence in Asia, Europe, and North America.

ETF investors seeking to add exposure to Kors can consider the Vanguard Growth ETF (VUG), which invests 2.4% of its portfolio in the company.


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