NEW YORK (TheStreet) -- Coach (COH) has been downgraded to "underperform" from "neutral," Bank of America said Wednesday. The firm said productivity is declining and consensus estimates appear as much as 23% too high.
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Separately, TheStreet Ratings team rates COACH INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate COACH INC (COH) 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 largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- COH's debt-to-equity ratio is very low at 0.09 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 1.23, which illustrates the ability to avoid short-term cash problems.
- The gross profit margin for COACH INC is currently very high, coming in at 75.16%. 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 17.34% compares favorably to the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Textiles, Apparel & Luxury Goods industry. The net income has decreased by 20.2% when compared to the same quarter one year ago, dropping from $238.93 million to $190.74 million.
- Net operating cash flow has decreased to $104.87 million or 49.91% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: COH Ratings Report