Zacks Investment Research upgraded
Michael Kors Holdings, Ltd.
) to a Zacks Rank #1 (Strong Buy) on Jan 19. Strong demand for
brands and assortments, along with innovative fashion designs are
the rank drivers for this stock.
Why the Upgrade?
Michael Kors has been witnessing rising earnings estimates on
the back of strong fiscal second-quarter results. In-fact this
global luxury lifestyle brand has delivered positive earnings
surprises in the last four quarters with an average surprise of
58.7%. The company also has a bright outlook for the upcoming
quarter, the results of which are due next month, owing to
growing demand for its products and the ongoing strength in
watches. The long-term expected earnings growth rate for this
stock is 31.4%.
Michael Kors declared its fiscal second-quarter results on
November 13 with earnings per share of 49 cents, soaring 96% year
over year. Total revenues surged 74% from last year to $532.9
million, surpassing the Zacks Consensus Estimate of $520 million.
Sturdy sales growth in each of the company's business segments
and across all geographies drove the upside.
Sales at the retail segment grew 82% on the back of a 45.1%
rise in comparable store sales and the opening of 66 new stores,
reflecting growing demand for Michael Kors' products.
The solid demand for Michael Kors' brands, implementation of
growth strategies and growing brand acceptance in Europe provided
upside potential in the second quarter. Likewise, Michael Kors is
optimistic about the fiscal third quarter and expects comparable
store sales to rise in mid-20% and expects sales in the range of
$525 million to $535 million. It projects earnings in the range
of 37 cents to 39 cents per share, almost double the prior-year
quarter earnings of 19 cents.
The company also anticipates impressive results in fiscal 2013
with earnings in the range of $1.48 and $1.50 per share,
significantly higher than the prior-year earnings of 80 cents per
share. The company expects net sales of about $1.86 billion to
$1.96 billion based on a rise of about 30% in comparable store
sales. Management also expects exceptional comparable store sales
to boost long term growth.
Estimates have increased for the fiscal 2013 and 2014 over the
past 60 days, after the strong fiscal second quarter results and
bright outlook for the upcoming quarter. The Zacks Consensus
Estimate increased 1.3% to $1.54 per share for fiscal 2013, while
it grew 4.3% to $2.03 per share for fiscal 2014.
Other Stocks to Consider
Another stock in the textile-apparel sector which holds a
Zacks Rank #1 (Strong Buy) is
Gildan Activewear Inc.
). Other stocks worth considering are
G-III Apparel Group, Ltd.
), all of which hold a Zacks Rank #2 (Buy).
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HANESBRANDS INC (HBI): Free Stock Analysis
MICHAEL KORS (KORS): Free Stock Analysis
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