CAPS' Weekly Top Stock Idea: Michael Kors

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Each week I cull a top stock idea from the pitches made on CAPS, The Motley Fool's 180,000-member free investing community. Want your idea considered for this series? Make a compelling pitch on CAPS with a minimum length of 400 words. Want to follow the weekly picks? Follow me on Facebook or Twitter.

Company

Michael Kors Holdings

Star Rating (out of 5)

**

Industry

Apparel Stores

Market Cap

$12.21 billion

Michael Kors Outperform Pick

Submitted by:

TMF1000

Member Rating:

99.76

Submitted On:

2/26/2013

Stock Price at Outperform Recommendation:

$57.57

Sources: S&P Capital IQ, Yahoo! Finance, and Motley Fool CAPS.


This Week's Pitch:

KORS was placed on Caps at $57.57. Their growth has been exceptional. They are trading at the low end of their trading range due to their yearly new stock offering which inflates shares outstanding. Even though shares are growing very quickly they are expanding their store base quickly and the money brought in from shares will allow them to do it without taking on debt. Net income is growing fast enough, not to affect shareholders so far.

The present P/E ratio is 33.87 and although that is on the high side of 30, they have grown revenues by over 70% for the last three quarters. I think this one will do quite well in my Caps portfolio. They have no debt and over $405 million in cash.

KORS
June 12, 2012 4Q: 2012 earnings highlights:

  • 4Q revenue was $379.99 million up 58.3% from $240 million
  • Fiscal 2012 revenue was $1.3 billion up 61.8% from $803.34 million
  • Fiscal 2012 revenue per share $6.60 per share
  • 4Q earnings were $0.22 up from $0.10
  • Fiscal 2012 earnings were $0.78 up from $0.40
  • Diluted share count 196.855 million up from 179.2 million
  • Cash flow for the year was 27.1 million down from $52.96 million
  • Cash flow for the year was $27.1 million or $0.14 per share
  • Trading range between June 12, 2012 and August 14, 2012 was $36.81 to $45.20: P/E ratio range was 47.19 to 57.95: PS ratio range was 5.58 to 6.85: Cash flow yield not meaningful

August 14, 2012 1Q: 2013 earnings' highlights:

  • Revenue was $414.865 million up 70.6% from $243.126 million
  • TTM revenue was $1.47 billion or $7.38 per share
  • Earnings were $0.34 up from $0.13
  • TTM earnings were $0.99
  • Diluted share count 199.39 million
  • Cash flow for the quarter was $41.2 million up from $36.8 million
  • TTM cash flow was $31.5 million or $0.16
  • Trading range between August 14, 2012 and November 13, 2012 was $47.15 to $58.62: P/E ratio range was 47.63 to 59.22: PS ratio range was 6.39 to 7.94 cash flow yield not meaningful

November 13, 2012 2Q: 2013 earnings' highlights:

  • Revenue was $532.935 million up 74.4% from $305.532 million
  • TTM revenue was $1.7 billion or $8.48 per share
  • Earnings were $0.49 up from $0.22
  • TTM earnings were $1.26
  • Diluted share count 200.192 million
  • Cash flow for six months was $70.839 million up from negative ($12.127 million)
  • TTM cash flow was $110.1 million or $0.55 per share
  • Trading range between November 13, 2012 and February 12, 2013 was $46.66 to $60.00 P/E ratio range was 37.03 to 47.62: PS ratio range was 5.5 to 7.08: Cash flow yield range was .09% to 1.2%

February 12, 2013 3Q: 2013 earnings' highlights:

  • Revenue was $636.8 million up 70.45% from $373.606 million
  • TTM revenue was $1.96 billion or $9.68
  • Earnings were $0.64 up from $0.20
  • TTM earnings were $1.70 per share
  • Diluted share count 202.82 million
  • Cash flow for nine months was $174.332 million up from $60.55 million
  • TTM cash flow was $140.88 million or $0.70
  • Cash $405.78 million: debt 0
  • Trading range between February 12, 2013 and the present February 26, 2013 was $57.85 to $65.10: P/E ratio range was 34.03 to 38.29: PS ratio range was 5.98 to 6.73: Cash Flow yield range was 1.1% to 1.2%

thompsonFN estimates: February 26, 2013

  • 4Q: 2013 $0.38
  • Fiscal 2013 $1.85
  • 1Q:2014 $0.48
  • Fiscal 2014 $2.41

Another Idea
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The article CAPS' Weekly Top Stock Idea: Michael Kors originally appeared on Fool.com.

Dan Dzombakcan be found on Twitter, @DanDzombak, or on his Facebook page,DanDzombak. Hehas no position in any of the companies mentioned in this article. Pitches must be compelling, made in the past 30 days, and be at least 400 words. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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