NEW YORK (TheStreet) -- Michael Kors (KORS) shares are flat in pre-market trading on Tuesday despite having its "buy" rating reiterated by analysts at Jefferies who also maintained the company's $100 price target.
The firm believes that the company's lack of promotion when compared to its high end handbag and accessory peers makes its high position in the space an even more impressive accomplishment.
"Our monthly online channel checks still show KORS as the least promotional amongst peers (excluding COH) though we note a modest increase in promotion, which we believe is most likely due to seasonality as we approach Holiday. We reiterate KORS as our top pick in the handbag/accessories space given its relatively low promotional cadence, attractive brand positioning, expanding market share and multople growth prospects," said the firm.
TheStreet Ratings team rates MICHAEL KORS HOLDINGS LTD as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate MICHAEL KORS HOLDINGS LTD (KORS) a BUY. This is driven by several positive factors, 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 robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 17.4%. Since the same quarter one year prior, revenues rose by 42.7%. 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 4.17, which clearly demonstrates the ability to cover short-term cash needs.
- MICHAEL KORS HOLDINGS LTD has improved earnings per share by 40.8% 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 ($4.18 versus $3.21).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Textiles, Apparel & Luxury Goods industry average. The net income increased by 42.0% when compared to the same quarter one year prior, rising from $145.81 million to $206.99 million.
- The gross profit margin for MICHAEL KORS HOLDINGS LTD is rather high; currently it is at 61.05%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 19.59% is above that of the industry average.
- You can view the full analysis from the report here: KORS Ratings Report