Michael Kors Upgraded to Strong Buy - Analyst Blog


On Jun 1, 2013, Zacks Investment Research upgraded Michael Kors Holdings Limited ( KORS ) to a Zacks Rank #1 (Strong Buy). Shares of this specialty retailer of apparel, accessories, cosmetics and footwear have amassed a year-to-date return of roughly 21%.

Why the Upgrade?

Michael Kors has been witnessing rising earnings estimates on the back of better-than-expected fourth-quarter fiscal 2013 results. The impressive results were attributable to growth across all business segments and geographies owing to the surge in demand and shop-in-shop store experience. Moreover, margin expansion contributed to the bottom-line growth.

The company declared sturdy fourth-quarter results on May 29, 2013, wherein earnings of 50 cents a share not only surpassed the Zacks Consensus Estimate of 37 cents but also portrayed a significant increase from 21 cents earned in the year-ago quarter.

If we look at the company's earnings surprise history, Michael Kors has outperformed the Zacks Consensus Estimate for 6 straight quarters by an average of 55%. In the recent concluded quarter, the company beat the Zacks' Estimate by 35.1%. The long-term expected earnings growth rate for this stock is 27.5%.

Michael Kors' total revenue soared 57.1% to $597.2 million in the quarter, and came ahead of the Zacks Consensus Estimate of $541 million. Retail net sales grew 58.8% to $272.7 million, reflecting comparable-store sales growth of 36.7% and the opening of net 67 new stores. Wholesale net sales surged 59.4% to $304.7 million, whereas licensing revenue jumped 15.7% to $19.8 million.

Management now projects total revenue in the range of $555 million to $565 million for first-quarter fiscal 2014 with expected comparable-store sales growth of 20%. Earnings are forecasted to be in the band of 46 cents to 48 cents a share for the quarter.

Michael Kors now envisions total revenue between $2.65 billion and $2.75 billion and comparable-store sales growth of 15% to 20% for fiscal 2014. Earnings are anticipated to be in the range of $2.43 to $2.47 per share for the fiscal year.

Following an upbeat guidance, the Zacks Consensus Estimate for fiscal 2014 rose 6.8% to $2.53 per share in the last 7 days. For fiscal 2015, the Zacks Consensus Estimate jumped 3.4% to $3.02 per share over the same time frame.  

Other Stocks to Consider

Apart from Michael Kors, there are other stocks with a favorable Zacks Rank that are capable of continuing with their upbeat performances. These include Dillard's Inc. ( DDS ), Flowers Foods, Inc. ( FLO ) and Bon-Ton Stores, Inc. ( BONT ), all carrying a Zacks Rank #1 (Strong Buy).

BON-TON STORES (BONT): Get Free Report

DILLARDS INC-A (DDS): Free Stock Analysis Report

FLOWERS FOODS (FLO): Free Stock Analysis Report

MICHAEL KORS (KORS): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: BONT , DDS , FLO , KORS



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