NEW YORK (TheStreet) -- Coach (COH - Get Report) shares inexplicably crashed just before 2pm EDT during Tuesday's trading session before reversing direction shortly after. In less than a minute, shares crashed around 2.5%, bottoming out at $55.80.
TheStreet Ratings team rates COACH INC as a Buy with a ratings score of B. The team has this to say about their recommendation:
"We rate COACH INC (COH) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins, notable return on equity and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."Highlights from the analysis by TheStreet Ratings Team goes as follows:
- COH's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.46, which illustrates the ability to avoid short-term cash problems.
- The gross profit margin for COACH INC is currently very high, coming in at 75.74%. Regardless of COH's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, COH's net profit margin of 18.93% compares favorably to the industry average.
- COACH INC reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, COACH INC increased its bottom line by earning $3.62 versus $3.54 in the prior year. For the next year, the market is expecting a contraction of 4.7% in earnings ($3.45 versus $3.62).
- COH, with its decline in revenue, underperformed when compared the industry average of 18.7%. Since the same quarter one year prior, revenues slightly dropped by 0.9%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.
- In its most recent trading session, COH has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.
- You can view the full analysis from the report here: COH Ratings Report