Ralph Lauren Corp Stock Buy Recommendation Reiterated (RL)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK (TheStreet) -- Ralph Lauren (NYSE:RL) has been reiterated by TheStreet Ratings as a buy with a ratings score of A- . The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, increase in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

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Highlights from the ratings report include:

• The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
• RALPH LAUREN CORP has improved earnings per share by 6.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, RALPH LAUREN CORP increased its bottom line by earning $7.13 versus $5.76 in the prior year. This year, the market expects an improvement in earnings ($7.85 versus $7.13).
• The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Textiles, Apparel & Luxury Goods industry average. The net income increased by 5.0% when compared to the same quarter one year prior, going from $184.10 million to $193.40 million.
• RL's revenue growth trails the industry average of 17.4%. Since the same quarter one year prior, revenues slightly increased by 4.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
• RL's debt-to-equity ratio is very low at 0.08 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, RL has a quick ratio of 1.55, which demonstrates the ability of the company to cover short-term liquidity needs.

Ralph Lauren Corporation engages in the design, marketing, and distribution of lifestyle products. The company has a P/E ratio of 21.6, equal to the average consumer non-durables industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Ralph Lauren has a market cap of $9.47 billion and is part of the consumer goods sector and consumer non-durables industry. Shares are up 12.1% year to date as of the close of trading on Wednesday.

You can view the full Ralph Lauren Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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