Michael Kors Holdings (KORS) Marked As A Dead Cat Bounce Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Michael Kors Holdings ( KORS) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Michael Kors Holdings as such a stock due to the following factors:

  • KORS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $370.6 million.
  • KORS has traded 3.0 million shares today.
  • KORS is up 3.1% today.
  • KORS was down 5.9% yesterday.

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More details on KORS:

Michael Kors Holdings Limited is engaged in the design, marketing, distribution, and retailing of branded women's apparel and accessories, and men's apparel. The company operates in three segments: Retail, Wholesale, and Licensing. KORS has a PE ratio of 25.4. Currently there are 8 analysts that rate Michael Kors Holdings a buy, 2 analysts rate it a sell, and 7 rate it a hold.

The average volume for Michael Kors Holdings has been 3.3 million shares per day over the past 30 days. Michael Kors has a market cap of $16.7 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 1.97 and a short float of 3.5% with 1.73 days to cover. Shares are down 5.2% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Michael Kors Holdings as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:
  • KORS's very impressive revenue growth greatly exceeded the industry average of 8.3%. Since the same quarter one year prior, revenues leaped by 53.6%. 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 4.12, which clearly demonstrates the ability to cover short-term cash needs.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • MICHAEL KORS HOLDINGS LTD reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, MICHAEL KORS HOLDINGS LTD increased its bottom line by earning $3.21 versus $1.97 in the prior year. This year, the market expects an improvement in earnings ($3.95 versus $3.21).
  • 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 59.3% when compared to the same quarter one year prior, rising from $101.10 million to $161.04 million.


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