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Foolish Forecast: Unzipping Coach

Coach (NYSE: COH  ) , a $12 billion powerhouse of pocketbook-making prowess, reports on its fiscal Q2 2006 earnings before the market opens tomorrow. Here's a quick rundown of what you'll need to know to put tomorrow's news in context.

Wall Street wisdom:

  • General consensus. Eighteen analysts follow Coach, of whom 13 rate the company a "buy," with the rest voting "hold." No one seems to think you should sell Coach.
  • Revenues. Analysts will be looking for Coach to report $650 million in sales tomorrow, a 22% increase over the year-ago quarter.
  • Earnings. Analysts predict $0.44 in profits per share, a 29% increase over the year-ago quarter.

Margin watch:
To get a better idea of the context for tomorrow's earnings and how they play into the company's long-term trends, watch how its margins develop on a "rolling basis." Here's how Coach's margins have been shaping up over the past six consecutive trailing-12-month periods.





























All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ending in the named months.

Looks like it's full steam ahead at Coach, with margins moving upwards on all three fronts: gross, operating, and net.

Coach's trailing P/E of 29 looks a little worse than its actual price-to-free cash flow ratio of 26. But even if the company continues to grow at analysts' projected rate of 20% per year, this is one pricey handbag.

Competitors to keep an eye on:
There aren't many, and even fewer who are publicly traded. Wilsons The Leather Experts (Nasdaq: WLSN  ) and Polo Ralph Lauren (NYSE: RL  ) offer some competition, however.

Fool contributorRich Smithdoes not own shares in any company named above.

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Rich Smith

I like things that go "boom." Sonic or otherwise, that means I tend to gravitate towards defense and aerospace stocks. But to tell the truth, over the course of a dozen years writing for The Motley Fool, I have covered -- and continue to cover -- everything from retailers to consumer goods stocks, and from tech to banks to insurers as well. Follow me on Twitter or Facebook for the most important developments in defense & aerospace news, and other great stories besides.

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Related Tickers

5/4/2016 1:29 PM
COH $40.52 Down -0.19 -0.47%
Coach CAPS Rating: ****
RL $92.99 Down -1.54 -1.63%
Polo Ralph Lauren… CAPS Rating: ***
WLSN $ Down %
Wilsons The Leathe… CAPS Rating: No stars