Ralph Lauren Corporation
) - a designer, marketer and distributor of lifestyle products -
remain on our Neutral list with a target price of $182.00.
At one end where we remain impressed by the company's
robust quarterly results and efforts to capture
growth opportunities, at other end we remain cautious
on the stock due to the prevailing weak macroeconomic conditions
in Europe, intense competition and volatile raw material
The third quarter 2013 adjusted earnings of $2.40 per share at
Ralph Lauren exhibited an improvement of 34.8% from the
comparable year-ago quarter as well as the Zacks Consensus
Estimate of $2.21. The year-over-year increase was primarily
driven by a rise in sales, improved margins and a lower tax
Looking at the earnings surprise history, the company has
beaten the Zacks Consensus Estimates in the past several
quarters. The average positive surprise in the trailing 4
quarters comes to 11.4%.
Bolstered by better-than-expected improvement in operating
margin, the company now expects it to grow between 75 basis
points (bps) and 100 bps, up from its earlier guidance range of
Apart from strong third-quarter results, Ralph Lauren's growth
story looks compelling. We believe that the company's sustained
focus on expanding higher growth businesses, such as accessories
category, along with strategically expanding its global
operations, bodes well for future growth.
On the flip side, the company operates in a competitive
environment and strives to maintain its market share, actively
competing with numerous manufacturers and distributors of premium
lifestyle products. The company primarily competes on the basis
of fashion, quality and service. Failure to offer high-quality
differentiated products at a competitive price may hamper Ralph
Lauren's market share, and in turn it's top and bottom lines
Other Stocks Worth Considering
Currently, Ralph Lauren has a Zacks Rank #2 (Buy). Other
stocks worth considering in the apparel retail industry are
Michael Kors Holdings Limited
Skechers USA Inc.
). All these companies hold a Zacks Rank #1 (Strong Buy).
GUESS INC (GES): Free Stock Analysis Report
MICHAEL KORS (KORS): Free Stock Analysis
RALPH LAUREN CP (RL): Free Stock Analysis
SKECHERS USA-A (SKX): Free Stock Analysis
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