Ralph Lauren Corporation
) - a designer, marketer and distributor of lifestyle products -
remains on our Neutral list with a target price of $187.00.
We believe that Ralph Lauren's initiatives to capitalize on
opportunities in emerging markets as well as its focus on core
business activities facilitate it to stay abreast with the
soft economic environment.
Going forward, the company's growth seems promising, given its
sustained focus on expanding higher growth businesses such as the
accessories category and the strategic augmentation of its global
operations - both of which will boost its top and bottom lines.
Moreover, Ralph Lauren leverages its globally renowned
brands and premium positioning to bolster its well-established
business in the specialty retailing sector.
We also remain impressed by the company's bottom-line
performance in fourth-quarter fiscal 2013. Driven by increased
sales, improved margins and a lower tax rate, Ralph Lauren's
earnings for the quarter jumped 42.4% to $1.41 per share and
surpassed the Zacks Consensus Estimate of $1.30.
Buoyed by better-than-expected earnings results, along with
its strategic move of global expansion, management provided an
impressive outlook for fiscal 2014.
However, we remain slightly anxious about the stock's future
performance due to the prevailing weak macroeconomic conditions
in Europe, intense competition, and volatile raw material prices.
Ralph Lauren is also vulnerable to risks of foreign operations,
since the company does not own or operate any manufacturing
facility and thereby purchases all its merchandise requirements
Given the pros and cons, we prefer to be on the sidelines and
maintain our Neutral recommendation.
Other Stocks Worth Considering
Better performing stocks in the textile apparel industry
Joe's Jeans Inc
Michael Kors Holdings Ltd
), all of which carry a Zacks Rank #2 (Buy).
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