We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Will Coach's Strategic Efforts Help Propel the Stock in 2017?
Read MoreHide Full Article
At times it is rational to hold certain stocks that have enough potential but are weighed down by tough market conditions. These stocks rally as soon as the market enters into a correction mode. Here, we have discussed one such stock, Coach, Inc. , which has an impressive long-term earnings growth rate of 10.6%.
As one of the leading American marketers of fine accessories and gifts, Coach boasts a proven strategy of investing in stores to enhance their sales output through product innovation, a compelling pricing strategy, new merchandise assortments and a cost-effective global sourcing model. We believe that these strategies will help drive comparable-store sales and operating margins in the long term. The company’s growth drivers include expansion of its global distribution model and venturing into under-penetrated markets.
The Zacks Rank #3 (Hold) company is undergoing a brand transformation and is introducing modern luxury concept stores in key markets. The acquisition of Stuart Weitzman has been accretive to its performance and is being viewed as a significant step in its efforts toward becoming a multi-brand company. Further, it remains optimistic about its dual-gender Legacy lifestyle collection, dedicated men's stores and international growth opportunities. Additionally, it is aggressively expanding its eCommerce platform.
The company’s strategic endeavors helped it post 11th straight quarter of positive earnings surprise when it reported first-quarter fiscal 2017 results, wherein both the top line and bottom line grew year over year. Moreover, Coach registered positive comparable-store sales at its North American segment for the second-straight quarter. Further, the company’s international operations witnessed robust growth. Management now projects low-to-mid single digits increase in revenue and double-digit growth in earnings per share during fiscal 2017. Additionally, the company anticipates operating margin between 18.5% and 19% for the fiscal year.
However, Coach sells products that are discretionary in nature and consequently, depends upon consumers’ disposable income, which is sensitive to macroeconomic factors. Further, fashion obsolescence remains the main concern for the company’s business model, which involves a sustained focus on product and design innovation.
Furthermore, the company generates a significant amount of net sales outside the U.S. Due to its high exposure to international markets, the company remains susceptible to currency fluctuations. Weakening of foreign currencies against the U.S. dollar may require it to either raise prices or contract profit margins in locations outside the U.S. An increase in price may have an adverse impact on the demand for its products.
Despite these pros and cons, the company’s shares have managed to outperform the Zacks categorized Textile-Apparel Manufacturing industry, which occupies space in the bottom 50% of the Zacks Classified industries. In the past one year, the company’s shares have gained 3.1%, whereas the Zacks categorized industry has declined 12.7%. Once the industry starts performing well the company’s shares might surge higher.
Burlington Stores delivered an average positive earnings surprise of 25.6% in the trailing four quarters and has a long-term earnings growth rate of 19.9%.
Target delivered an average positive earnings surprise of 9.9% in the trailing four quarters and has a long-term earnings growth rate of 9.4%.
Ross Stores delivered an average positive earnings surprise of 5% in the trailing four quarters and has a long-term earnings growth rate of 10.5%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Will Coach's Strategic Efforts Help Propel the Stock in 2017?
At times it is rational to hold certain stocks that have enough potential but are weighed down by tough market conditions. These stocks rally as soon as the market enters into a correction mode. Here, we have discussed one such stock, Coach, Inc. , which has an impressive long-term earnings growth rate of 10.6%.
As one of the leading American marketers of fine accessories and gifts, Coach boasts a proven strategy of investing in stores to enhance their sales output through product innovation, a compelling pricing strategy, new merchandise assortments and a cost-effective global sourcing model. We believe that these strategies will help drive comparable-store sales and operating margins in the long term. The company’s growth drivers include expansion of its global distribution model and venturing into under-penetrated markets.
The Zacks Rank #3 (Hold) company is undergoing a brand transformation and is introducing modern luxury concept stores in key markets. The acquisition of Stuart Weitzman has been accretive to its performance and is being viewed as a significant step in its efforts toward becoming a multi-brand company. Further, it remains optimistic about its dual-gender Legacy lifestyle collection, dedicated men's stores and international growth opportunities. Additionally, it is aggressively expanding its eCommerce platform.
The company’s strategic endeavors helped it post 11th straight quarter of positive earnings surprise when it reported first-quarter fiscal 2017 results, wherein both the top line and bottom line grew year over year. Moreover, Coach registered positive comparable-store sales at its North American segment for the second-straight quarter. Further, the company’s international operations witnessed robust growth. Management now projects low-to-mid single digits increase in revenue and double-digit growth in earnings per share during fiscal 2017. Additionally, the company anticipates operating margin between 18.5% and 19% for the fiscal year.
However, Coach sells products that are discretionary in nature and consequently, depends upon consumers’ disposable income, which is sensitive to macroeconomic factors. Further, fashion obsolescence remains the main concern for the company’s business model, which involves a sustained focus on product and design innovation.
Furthermore, the company generates a significant amount of net sales outside the U.S. Due to its high exposure to international markets, the company remains susceptible to currency fluctuations. Weakening of foreign currencies against the U.S. dollar may require it to either raise prices or contract profit margins in locations outside the U.S. An increase in price may have an adverse impact on the demand for its products.
Despite these pros and cons, the company’s shares have managed to outperform the Zacks categorized Textile-Apparel Manufacturing industry, which occupies space in the bottom 50% of the Zacks Classified industries. In the past one year, the company’s shares have gained 3.1%, whereas the Zacks categorized industry has declined 12.7%. Once the industry starts performing well the company’s shares might surge higher.
Stocks that Warrant a Look
Investors may consider stocks such as Burlington Stores, Inc. (BURL - Free Report) , flaunting a Zacks Rank #1 (Strong Buy); and Target Corporation (TGT - Free Report) and Ross Stores, Inc. (ROST - Free Report) , both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Burlington Stores delivered an average positive earnings surprise of 25.6% in the trailing four quarters and has a long-term earnings growth rate of 19.9%.
Target delivered an average positive earnings surprise of 9.9% in the trailing four quarters and has a long-term earnings growth rate of 9.4%.
Ross Stores delivered an average positive earnings surprise of 5% in the trailing four quarters and has a long-term earnings growth rate of 10.5%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>