Why Coach Is Too Cheap to Pass Up

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, luxury handbag maker Coach (NYSE: COH  ) has earned a respected four-star ranking.

With that in mind, let's take a closer look at Coach and see what CAPS investors are saying about the stock right now.

Coach facts

Headquarters (Founded)

New York (1941)

Market Cap

$14.4 billion

Industry

Apparel, accessories, and luxury goods

Trailing-12-Month Revenue

$4.9 billion

Management

Chairman/CEO Lew Frankfort
President/COO Jerry Stritzke

Return on Equity (Average, Past 3 Years)

50.9%

Cash / Debt

$760.8 million / $23.3 million

Dividend Yield

1.9%

Competitors

Michael Kors Holdings (NYSE: KORS  )
Ralph Lauren
(NYSE: RL  )
Tiffany
(NYSE: TIF  )

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 94% of the 2,800 members who have rated Coach believe the stock will outperform the S&P 500 going forward.

Just yesterday, one of those Fools, All-Star DrGoldin, tapped the stock's big pullback as an attractive bargain opportunity:

[Coach] missed [earnings estimates], so that's obviously a big disappointment, but a 15% sell-off seems overdone to me. Gross margins are still over 70%! Sales in China increased by 40%. It's not ALL bad news.

If you want market-thumping returns, you need to put together the best portfolio you can. Of course, despite a strong four-star rating, Coach may not be your top choice.

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Read/Post Comments (1) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 26, 2013, at 10:01 AM, EquityBull wrote:

    There is a huge risk that Coach could have finally hit some major competition with Michael Kors. My wife and her friends were all buying Kors bags, watches, clothes and accessories this past holiday season. Kors has the hot hand and Coach is losing ground against them rapidly.

    Fashion is fickle. Coach has a longer track record but what if this up and comer Kors has staying power. They have been around over a decade and are now exploding onto the scene with more stores and items the ladies all want. I watched them all drool over everything Kors and it was the gift of choice this holiday.

    If Kors proves to have staying power it will come at the expense of Coach.

    Just 2 years ago my wife always wanted Louis Vuitton and Coach bags. Did not even look at either of those this year.

    Can Frankfort turn the tide? I don't know. This is the risk in the stock. Sometimes you can only do what you can do but certain brands grab lightning in a bottle and last.

    Also Tory Burch and Kate Spade coming on hot too. These are all competitive pressures in this price and fashion category Coach never had to deal with.

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