On Jun 1, 2013, Zacks Investment Research upgraded Michael Kors Holdings Limited (KORS - Analyst Report) to a Zacks Rank #1 (Strong Buy). Shares of this specialty retailer of apparel, accessories, cosmetics and footwear have amassed a year-to-date return of roughly 21%.
Why the Upgrade?
Michael Kors has been witnessing rising earnings estimates on the back of better-than-expected fourth-quarter fiscal 2013 results. The impressive results were attributable to growth across all business segments and geographies owing to the surge in demand and shop-in-shop store experience. Moreover, margin expansion contributed to the bottom-line growth.
The company declared sturdy fourth-quarter results on May 29, 2013, wherein earnings of 50 cents a share not only surpassed the Zacks Consensus Estimate of 37 cents but also portrayed a significant increase from 21 cents earned in the year-ago quarter.
If we look at the company’s earnings surprise history, Michael Kors has outperformed the Zacks Consensus Estimate for 6 straight quarters by an average of 55%. In the recent concluded quarter, the company beat the Zacks’ Estimate by 35.1%. The long-term expected earnings growth rate for this stock is 27.5%.
Michael Kors’ total revenue soared 57.1% to $597.2 million in the quarter, and came ahead of the Zacks Consensus Estimate of $541 million. Retail net sales grew 58.8% to $272.7 million, reflecting comparable-store sales growth of 36.7% and the opening of net 67 new stores. Wholesale net sales surged 59.4% to $304.7 million, whereas licensing revenue jumped 15.7% to $19.8 million.
Management now projects total revenue in the range of $555 million to $565 million for first-quarter fiscal 2014 with expected comparable-store sales growth of 20%. Earnings are forecasted to be in the band of 46 cents to 48 cents a share for the quarter.
Michael Kors now envisions total revenue between $2.65 billion and $2.75 billion and comparable-store sales growth of 15% to 20% for fiscal 2014. Earnings are anticipated to be in the range of $2.43 to $2.47 per share for the fiscal year.
Following an upbeat guidance, the Zacks Consensus Estimate for fiscal 2014 rose 6.8% to $2.53 per share in the last 7 days. For fiscal 2015, the Zacks Consensus Estimate jumped 3.4% to $3.02 per share over the same time frame.
Other Stocks to Consider
Apart from Michael Kors, there are other stocks with a favorable Zacks Rank that are capable of continuing with their upbeat performances. These include Dillard’s Inc. (DDS - Analyst Report) , Flowers Foods, Inc. (FLO - Snapshot Report) and Bon-Ton Stores, Inc. , all carrying a Zacks Rank #1 (Strong Buy).