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Michael Kors Holdings Ltd Stock Hold Recommendation Reiterated (KORS)

NEW YORK ( TheStreet) -- Michael Kors Holdings (NYSE: KORS) has been reiterated by TheStreet Ratings as a hold with a ratings score of C. The company's strengths can be seen in multiple areas, such as its notable return on equity, robust revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we find that the stock itself is trading at a premium valuation.

Highlights from the ratings report include:

  • Compared to other companies in the Textiles, Apparel & Luxury Goods industry and the overall market, MICHAEL KORS HOLDINGS LTD's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • KORS's very impressive revenue growth greatly exceeded the industry average of 3.8%. Since the same quarter one year prior, revenues leaped by 57.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • KORS has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 4.13, which clearly demonstrates the ability to cover short-term cash needs.
  • Powered by its strong earnings growth of 127.27% and other important driving factors, this stock has surged by 41.81% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.

Michael Kors Holdings Limited engages in the design, marketing, distribution, and retail of branded women's apparel and accessories, and men's apparel. The company sells its products primarily under the names of Michael Kors, MICHAEL KORS, MICHAEL MICHAEL KORS, and KORS MICHAEL KORS. Michael Kors has a market cap of $12.4 billion and is part of the services sector and specialty retail industry. The company has a P/E ratio of 30.00, above the S&P 500 P/E ratio of 18.00. Shares are up 21.5% year to date as of the close of trading on Friday.

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

--Written by a member of TheStreet Ratings Staff.

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