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A Look at Michael Kors’ Stock Performance and Valuations

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Kors’ stock market performance

Despite its moderate financial performance, Michael Kors’ (KORS) stock price has risen 11.5% year-to-date (YTD). Behind this rise has been Wall Street’s recent optimism and stock upgrades, which we discussed in the previous article.

Competitor Tapestry (TPR), previously known as Coach (COH), has also shown strength in the stock market. The company is sitting on YTD gains of 18%. The two companies have done better than the broader S&P 500 Apparel and Accessories Index (+7.2%). In comparison, the S&P 500 Index (SPX) index has gained 15.2% YTD. 

Comparing target price and gain potential

On November 2, Michael Kors (KORS) traded at $47.93, which was 9.2% below its 52-week-high price. Analysts do not see any upside to the company’s stock, as they have assigned a target price of $47.76 for the company’s stock.

Tapestry, however, has a substantial upside. Its stock price is forecast to jump ~18% over the next year.

Valuations and earnings expectations

Michael Kors (KORS) is currently trading at a one-year forward price-to-earnings (or PE) ratio of 12.9x versus a three-year average of 11.2x. It is trading at the upper end of its 52-week PE range of 8.8x–13.4x. Tapestry trades at a premium to KORS, and it is valued at 17.5x the next-12-months’ earnings.

However, Tapestry’s valuations appear stronger, as the company could witness a 9.3% increase in earnings per share (or EPS) over the next 12 months (or NTM). In comparison, Michael Kors’ NTM EPS could fall ~9% over the same period.

ETF investors seeking to add exposure to KORS can consider the iShares Edge MSCI Multifactor Consumer Discretionary ETF (CNDF) which invests 1.9% of its portfolio in the company.

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