Snapshot of the series
New York-based Coach (COH) reported its fiscal 4Q17 results before the market opened on August 15, 2017. The results pertain to the three-month period ending July 1, 2017.
Coach reported adjusted diluted earnings of $0.50 per share, beating the Wall Street average profit estimate by $0.01.
Coach fell short of the top-line expectation by $20 million, reporting a revenue decline of 1.8% YoY (year-over-year) to $1.13 billion.
Coach’s stock price plummeted 15% in reaction to the top-line miss and a pessimistic guidance for fiscal 2018 guidance. The handbag retailer is expected to see $2.35–$2.40 per share in its full-year earnings, which would be an increase of ~10%–12% over last year. Analysts were expecting $2.49 per share for the year.
Established in 1941, Coach is America’s leading luxury fashion and accessory brand. Its products target the affordable luxury segment and include handbags, watches, footwear, and apparel.
Valuations update and stock recommendation
Coach is currently trading at a one-year forward PE (price-to-earnings) ratio of 17x, compared with its three-year average of 18.5x. It continues to trade at a premium to handbag rival Michael Kors (KORS), which is valued at 11.9x, and it’s also more expensive than PVH Corporation’s (PVH) 15.8x and Ralph Lauren’s (RL) 16x.
The average 12-month price target for Coach stock is $50.46, reflecting an upside of 24% over the next year.
Investors looking to invest in Coach through ETFs can choose the First Trust RBA Quality Income ETF (QINC). Coach has a weight of 3.2% in QINC.