Michael Kors (KORS) is new to the market but has already become a Zacks #1 Rank (Strong Buy).
Company Description
Michael Kors sells branded women’s apparel and accessories, and men’s apparel. The company sells its products primarily under the names of Michael Kors, MICHAEL KORS, MICHAEL MICHAEL KORS, and KORS MICHAEL KORS. The company was founded in 1981 and is based in Tsim Sha Tsui, Hong Kong.
Michael Kors Beats Estimates in First Report
Michael Kors topped the Zacks Consensus Estimate in its only quarter as a public company. On February 24, the company reported earnings per share of $0.19, $0.10 or 111% ahead of the Zacks Consensus Estimate.
Revenues also topped expectations for Michael Kors. The Zacks Consensus Estimate was calling for $351 million in sales and the company posted $374 million. The $22 million upside surprise translates into a 6% revenue beat.
Michael Kors Next Earnings Report
The company is expected to release earnings again on June 12, 2012. The current Zacks Consensus Estimate is calling for $361 million in revenue and $0.16 in EPS.
Michael Kors Sees Estimates Moving Higher
Estimates for Michael Kors have been rising of late. The Zacks Consensus Estimate for 2012 for Michael Kors Automotive stood at $0.74 as of January 2012. The consensus has since moved higher to $0.99. Over the same time period estimates for 2013 have moved from $0.98 to $1.24. The implied earnings growth rate of more than 24% is just what aggressive growth investors are seeking.
Michael Kors has a limited operating history so its metrics for valuation purposes are not terribly relevant. The 9x trailing PE is below the industry average of 20x, but the forward PE of 39X is well above the 17x industry average. The 20x price to book multiple is likely to come down over time as is the 9x price to sales multiple.
The Chart
A quick look at the chart shows that the stock has broken below the 21 and 50 day moving averages. With its limited history the chart really doesn’t speak to loudly at this point. With increasing estimates and a another beat on the top and bottom line, investors can continue to see KORS looking good in their stock portfolios. Michael Kors is a Zacks #1 Rank (Strong Buy).
Brian Bolan is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor service
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