Will Michael Kors Stay Fashionable Forever?

On Wednesday, Michael Kors (NYSE: KORS  ) will release its latest quarterly results. As one of the hottest retailers in the high-end market, Kors has seen its stock perform extremely well since going public in late 2011. But with shares at premium valuations, can the company deliver on the promise that shareholders see in it?

Kors has done an excellent job lately of navigating the luxury-retail industry, taking advantage of favorable conditions in many parts of the market while avoiding some of the missteps that have plagued its rivals. Let's take an early look at what's been happening with Michael Kors over the past quarter and what we're likely to see in its quarterly report.

Stats on Michael Kors

Analyst EPS Estimate

$0.39

Change From Year-Ago EPS

77%

Revenue Estimate

$546.07 million

Change From Year-Ago Revenue

44%

Earnings Beats in Past 4 Quarters

4

Source: Yahoo! Finance.

Will Michael Kors grow fast enough this quarter?
Analysts have gotten more optimistic in their assessment of Kors and its earnings prospects recently, adding a penny per share to earnings estimates for the March quarter and $0.03 to their views for the 2014 fiscal year. The stock, though, has largely stalled out, rising less than 2% since late February.

The explanation for Kors' long-term performance is simple: The company is growing at an incredibly fast pace. In its previous quarter, sales rose 70% year over year. That's especially impressive when you consider that Coach (NYSE: COH  ) has suffered from relatively weak sales growth lately, forcing the company to undertake a big strategic shift toward remaking itself as a "lifestyle" brand.

That hasn't kept Kors shares moving higher, however. As Fool contributor Andrew Marder noted recently, a big part of the selling pressure has come from honorary chairman and chief creative officer Michael Kors himself, who has sold off a substantial portion of his holdings in the stock. The good news for investors worried about this trend is that the fashion designer has only a small stake left in the company, removing the potential for further major divestitures in the future.

Still, some signs have pointed toward strong results for Kors this quarter. Earlier this month, Fossil (NASDAQ: FOSL  ) reported substantial growth in its watch business, raising its full-year earnings forecast by 2% to 3%. Although a big part of Fossil's gains came from its direct-to-consumer sales, the watchmaker also produces watches for Kors, and so some of Fossil's success is due to Kors' customers.

In Kors' quarterly report, watch for the company to provide some guidance about its exact timeframe for trying to move into the lucrative Chinese market. Slowing growth in China has been a problem for investors throughout the stock market, and with Kors looking to expand into the emerging market in future years, bad timing could cost the retailer some of the growth it had expected to find there.

If you're looking to get into Michael Kors now, the big question is this: Has the stock finally become too expensive, or is there still room left to run? The Motley Fool's premium report on Michael Kors gives investors all the information they need to make the right decision. We cover the key must-watch areas, opportunities, and threats to the company that investors need to know. To claim your copy, simply click here now for instant access.

Click here to add Michael Kors to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.


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