| Stock (Symbol) | Stock Price | |
Michael Kors (KORS) |
$79 |
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| Data is as of | Expected to Report | Sector |
September 4, 2014 |
Nov 03 – Nov 07 |
Retail & Travel |
| Sharek’s Take | ||
 Michael Kors is swimming in a sea of negativity. Profit margins fell last qtr, the 1st time that’s happened since KORS went public, and inventory was up 65% year-over-year while sales grew only 43%. One reason for the lower margins is KORS got its Fall line in stores early and discounted to make room (KORS has the highest margins in the industry BTW). Still, the company is smart enough to have leather backpacks coming in, which I think will be the hot item this season. I feel we need to sit with KORS and wait for the next wave up. The company is still growing rapidly, with 24% same-store-sales growth last qtr. European sales jumped 128% last qtr — with 52% same-store-sales growth — and there’s vast potential in Europe and Asia. I think KORS is a 30% grower selling for 19x earnings. There’s solid upside here, but we have to wait for the Fast Money crowd to leave. |
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| One-Year Chart | ||
 When I look at the past 4 qtrs (bottom/left) I see great growth. Estimates don’t look as good, and maybe KORS is slowing some, but the company beat the street by a dime in each of the last 2 qtrs and if it does so again this qtr it will have 38% profit growth. Looks like the stock’s hitting support levels here too. |
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| Earnings Table | ||
 Profits increased 49% last quarter on 43% growth in sales.KORS beat the street by 10 cents a share for the second straight quarter. Sales growth was expected to be in the low 30s, came in 10% higher. I think KORS will beat this quarter too. Annual Profit Estimates increased some, but not a lot. Quarterly profit growth shows mid 20% growth coming, but if KORS beats these numbers 30% to 40% growth could be in its future. |
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| Fair Value | ||
 I’m taking my Fair Value P/E down from 40 to 30 based on expected slower growth ahead. Still, the stock is a bargain at 19 times earnings, and once the Sea of Negativity sets, KORS could soar again. |
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| Ten-Year Chart | ||
 KORS went through a similar period of underappreciation — right after I purchased the stock. On the chart right after the initial jump after the IPO. I think this stock is fine. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
9 of 11 |
Michael Kors has pros and cons and the Bulls and Bears are fighting over it. In the end this is a rapidly growing (maybe 30% a year) retailer with lots of room to expand in Europe & Asia and it’s selling for less than 20x earnings. Michael Kors is ranked 9th in the 24 stock Growth Portfolio and 11 stock Aggressive Growth Portfolio Power Rankings. It was ranked 4th in both these last qtr, but the stock isn’t as timely now. |
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Aggressive Growth Portfolio
9 of 11 |
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