Michael Kors is set to report third quarter earnings Thursday, February 5. We believe KORS is set to beat estimates on third quarter earnings.Michael Kors has always been an intriguing story to us due to the company’s incredible success and growth. KORS’ 30% operating margin is the highest in its sector by a considerable amount, with Lululemon Athletica and Coach coming in at second and third with 24.6% and 20.8% operating margins, respectively.Further, Kors is also making the most money in its sector without accumulating any debt on the balance sheet. Michael Kors experienced 15% revenue growth from the first quarter to the second this fiscal year, which is rather small compared to its average 40% revenue growth year-over-year in the past few fiscal years. KORS is positioned to continue both this quarter-to-quarter and year-over-year revenue growth in Q3 with the aid of holiday sales.
Additionally, Michael Kors has the fourth highest average sales per square foot in the industry ($1,866/sqft), trailing only Apple , Murphy USA, and Tiffany & Co.Michael Kors Holdings Ltd. is one of the best known luxury retailers. It will report earnings today before the market opens. Wall Street consensus is calling for earnings of 96 cents per share and $1.15 billion in revenue. Analysts had been cautious on KORS because of many comparing the stock’s trajectory to that of troubled Coach, Inc.’s .Michael Kors Holdings Ltd. opened at $41.79 on Tuesday, has a market cap of $7.48 billion and a price-to-earnings ratio of 9.64. The company’s 50-day moving average is $48.63 and its 200-day moving average is $47.24. Michael Kors Holdings Ltd. has a 12-month low of $34.83 and a 12-month high of $59.49.
Most equity research analysts have recently weighed in on the company; most recently Credit Suisse reiterated KORS with a “hold” rating. Piper Jaffray reissued a neutral rating, Jefferies Group reissued a buy rating, and Deutsche Bank raised its price objective from $50.00 to $56.00 and gave the company a buy rating. In total, twenty analysts have rated the stock with a hold rating, eleven with a buy rating, and one has issued a strong buy rating. The average rating is Hold, and the average price target is $54.73.Retail has been a very difficult sector, especially luxury retail with competitors such as Nordstrom and Tiffany having seen losses already. KORS was also already hurt; weak consumer spending has made the share price tumble 20.1% since the middle of April.But Michael Kors had three straight quarters of earnings beats. Earnings are expected to increase by 9% and sales expected to grow by 11%. Given the recent history of the stock, the stock is typically a positive mover during earnings season. The shares of KORS increase 4% on average through earnings and continue to make gains the month following.Tags: 2 tone Michael Kors watch