Back to top

Analyst Blog

N.Y.-based Ralph Lauren Corporation (RL - Analyst Report) – a designer, marketer and distributor of lifestyle products – remain on our Neutral list with a target price of $182.00.

Why Reiterate?

At one end where we remain impressed by the company’s  robust quarterly results and efforts to capture  growth opportunities, at other end  we remain cautious on the stock due to the prevailing weak macroeconomic conditions in Europe, intense competition and volatile raw material prices.

The third quarter 2013 adjusted earnings of $2.40 per share at Ralph Lauren exhibited an improvement of 34.8% from the comparable year-ago quarter as well as the Zacks Consensus Estimate of $2.21. The year-over-year increase was primarily driven by a rise in sales, improved margins and a lower tax rate.

Looking at the earnings surprise history, the company has beaten the Zacks Consensus Estimates in the past several quarters. The average positive surprise in the trailing 4 quarters comes to 11.4%.

Bolstered by better-than-expected improvement in operating margin, the company now expects it to grow between 75 basis points (bps) and 100 bps, up from its earlier guidance range of 25–75 bps.

Apart from strong third-quarter results, Ralph Lauren’s growth story looks compelling. We believe that the company’s sustained focus on expanding higher growth businesses, such as accessories category, along with strategically expanding its global operations, bodes well for future growth.

On the flip side, the company operates in a competitive environment and strives to maintain its market share, actively competing with numerous manufacturers and distributors of premium lifestyle products. The company primarily competes on the basis of fashion, quality and service. Failure to offer high-quality differentiated products at a competitive price may hamper Ralph Lauren’s market share, and in turn it’s top and bottom lines performance.

Other Stocks Worth Considering

Currently, Ralph Lauren has a Zacks Rank #2 (Buy). Other stocks worth considering in the apparel retail industry are Guess’ Inc. (GES - Analyst Report), Michael Kors Holdings Limited (KORS - Analyst Report) and Skechers USA Inc. (SKX - Analyst Report). All these companies hold a Zacks Rank #1 (Strong Buy).

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
CENTURY ALU… CENX 22.53 +4.50%
ERBA DIAGNO… ERB 2.91 +4.30%
PLANAR SYST… PLNR 4.31 +3.86%
MALLINCKROD… MNK 72.17 +3.83%
GTT COMMUNI… GTT 12.06 +3.52%