Kate Spade (KATE) Stock Climbs Ahead of Earnings Release
NEW YORK (TheStreet) -- Kate Spade & Co. (KATE) shares are advancing 0.52% to $19.51 on Wednesday ahead of the company's third quarter fiscal 2015 earnings results due out before the market opens on Thursday.
Both profits and revenue are expected to grow year-over-year.
For the latest quarter, analysts are anticipating the fashion company to earn 4 cents a share on revenue of $280.02 million.
During this period the year before, the company reported no profits on revenue of $250.42 million.
It appears that the company's results will be helped by its solid brand portfolio, diverse business model and efforts to enhance its operating margins, according to Zacks Equity Research.
Separately, TheStreet Ratings team rates KATE SPADE & CO as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
We rate KATE SPADE & CO (KATE) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth and notable return on equity. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow, a generally disappointing performance in the stock itself and generally higher debt management risk.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Textiles, Apparel & Luxury Goods industry. The net income increased by 293.9% when compared to the same quarter one year prior, rising from -$4.40 million to $8.54 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 15.4%. Since the same quarter one year prior, revenues slightly increased by 5.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The gross profit margin for KATE SPADE & CO is rather high; currently it is at 61.00%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, KATE's net profit margin of 3.03% significantly trails the industry average.
- The debt-to-equity ratio is very high at 2.46 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, KATE's quick ratio is somewhat strong at 1.23, demonstrating the ability to handle short-term liquidity needs.
- Net operating cash flow has decreased to $43.00 million or 17.84% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, KATE SPADE & CO has marginally lower results.
- You can view the full analysis from the report here: KATE