So a 1YPEG of only 0.27 with a TTM P/E of 10, while earnings and revenue are still growing rapidly (though decelerating as the law of large numbers kicks in).
The stock price has declined from a peak of around $98 in Feb, 2014 to around $42 today. This seems to largely be a reaction to slowing growth, and then the stock plummeted when KORS announced negative same store sales in the most recent quarter. I think people are looking at the recent decline of Coach and are throwing KORS into the same bucket and over-reacting.
I do have a position in KORS (down heftily) and did recently add to it based on the argument posed above and similar ones “pounded on the table” by Tom E. For me, this is an experiment in the rallying ability of the above argument as these days, it is not my policy to add to stocks that are underwater. So experimenting, in this case (with a position still small overall even with the recent addition).
However, in spite of the strong argument for an undervalued stock that is being punished on several counts which if looked into more deeply could easily be the result not of poor performance (though poor performance stock price wise) but instead a result of such quick success of a recent IPO that company is plowing money back in to build on that early success so KORS can REALLY take off. Tom E. proposes once website is up and running and store expansion slows a little, cash flow will exceed 1 billion.
We’ll see. My biggest niggling doubt in spite of excellent arguments is I don’t find the fashion that compelling, especially at high end prices. Walked by a recent 50% off table at Bloomingdales of KORS purses. Not the super high end couple thousand dollar ones, but the ones that retail for only $350 or so (still above my handbag budget). But even at $175, I couldn’t find one that I might love to carry. Even if they were dropped down to $50, I couldn’t see anything that I felt was unique or delicious that would draw me even pretend to want one.
This does concern me.
okapimoon