Coach
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.
Margins |
7/04 |
10/04 |
1/05 |
4/05 |
7/05 |
10/05 |
---|---|---|---|---|---|---|
Gross |
74.9% |
75.4% |
75.8% |
76.4% |
76.6% |
76.8% |
Op. |
33.4% |
33.5% |
34.9% |
35.5% |
36.2% |
36.6% |
Net |
19.8% |
19.9% |
20.9% |
21.5% |
22.7% |
23.2% |
Looks like it's full steam ahead at Coach, with margins moving upwards on all three fronts: gross, operating, and net.
Valuation:
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
Fool contributor Rich Smith does not own shares in any company named above.