Michael Kors (KORS) Soars to a 52-Week High, Time to Cash Out?

Shutterstock photo

Have you been paying attention to shares of Michael Kors Holdings Limited KORS ? Shares have been on the move with the stock up 10.5% over the past month. KORS hit a new 52-week high of $70 in the previous session. Michael Kors has gained 8.7% since the start of the year compared to the -1.2% move for the Consumer Discretionary sector and the 11.1% year-to-date return for its peer group.

What's Driving the Outperformance?

The stock has an impressive record of positive earnings surprises, having beaten the Zacks Consensus Estimate in each of the last four quarters. In its last earnings report on February 7, 2018, Michael Kors reported EPS of $1.77 versus the Zacks Consensus Estimate of $1.29 while it beat the consensus revenue estimate by 4.71%.

For the current fiscal year, Michael Kors is expected to post earnings of $4.77 per share on $4.68 billion in revenues. Meanwhile, for the next fiscal year, the company is expected to earn $5.03 per share on $4.98 billion in revenues. This represents a year-over-year change of 6.21% and 6.39%, respectively.

Valuation Metrics

While KORS has moved to its 52-week high in the recent past, investors need to be asking, what is next for the company? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.

On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

Michael Kors has a Value Score of B. The stock's Growth and Momentum Scores are B and B, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 14.4X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 11.8X versus its peer group's average of 12.5X. Additionally, the stock has a PEG ratio of 2.05. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Michael Kors Holdings Limited Price and Consensus

Michael Kors Holdings Limited Price and Consensus | Michael Kors Holdings Limited Quote

Zacks Rank

We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Michael Kors currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 and Style Scores of A or B, it looks as if Michael Kors fits the bill. Thus, it seems as though KORS shares could have potential in the weeks and months to come.

How Does Michael Kors Stack Up to the Competition?

Shares of Michael Kors Holdings Limited have been moving higher, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also looking good, including Columbia Sportswear Company COLM , Ralph Lauren RL , and PVH PVH , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.

The Zacks Industry Rank is in the top 25% of all the industries we have in our universe, so it looks like there are some nice tailwinds for KORS, even beyond its own solid fundamental situation.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Columbia Sportswear Company (COLM): Free Stock Analysis Report

Ralph Lauren Corporation (RL): Free Stock Analysis Report

PVH Corp. (PVH): Free Stock Analysis Report

Michael Kors Holdings Limited (KORS): Free Stock Analysis Report

To read this article on Zacks.com click here.

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

This article appears in: Investing , Stocks
Referenced Symbols: COLM , RL , PVH , KORS

More from Zacks.com




Equity Research

Research Brokers before you trade

Want to trade FX?