Is Michael Kors going to beat the market again?

Next week the apparel company will present Q3 2015 numbers.

The Luxonomist. 28/01/2015
Michael Kors Resort 2015. Make clic to buy

As usual everybody thinks on Michael Kors in order to detect where the luxury and premium sectors are heading. Some analyst fears about Kors sales final number because of the extraordinary discounts made by the company in its site during the Holidays season. Some fears it could be hurting final Q3 2015 results which are being reported on February, 5. But not all.

Elephant Analytics posted a blog saying just the contrary. Michael Kors is going to beat the market again, as the company did the last trimesters. According to them guidance is for $1.27 billion to $1.30 billion in revenue, with earnings of $1.31 to $1.34 per share. However, Michael Kors has beaten its initial revenue guidance by an average of 13%, with the smallest beat being 6% in Q2 2014.

Michael Kors 2015. Make clic to buy

Therefore, they believe that Michael Kors could do at least $1.4 billion in revenue during Q3 2015, which would represent a 9% beat versus the midpoint of its guidance. This would likely translate into earnings of around $1.48 per share. Comparatively, analyst estimates remain largely in line with guidance at $1.3 billion in revenue and earnings of $1.34 per share. Last quarter Michael Kors did beat the market as we reported.

Consensus analyst (mainly Bloomberg and Yahoo) believes Michael Kors is having slowing growth and lower margins, and the stock has already priced that in and then some. Michael Kors is currently trading at an enterprise value multiple of 2.49x analyst estimates for forward year revenue. This is in the general range of competitors such as Coach and Kate Spade.

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