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 (
-- Ralph Lauren
) 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 largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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Highlights from the ratings report include:
- RL's debt-to-equity ratio is very low at 0.07 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 1.71, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for RALPH LAUREN CORP is rather high; currently it is at 58.80%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 11.50% is above that of the industry average.
- RALPH LAUREN CORP's earnings per share declined by 6.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. 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).
- RL, with its decline in revenue, slightly underperformed the industry average of 6.6%. Since the same quarter one year prior, revenues slightly dropped by 2.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
Ralph Lauren Corporation engages in the design, marketing, and distribution of lifestyle products. Ralph Lauren has a market cap of $9.49 billion and is part of the consumer goods sector and consumer non-durables industry. The company has a P/E ratio of 22, above the S&P 500 P/E ratio of 17.7. Shares are up 13.4% year to date as of the close of trading on Tuesday.
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--Written by a member of TheStreet Ratings Staff.
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