By Rob Otman
Michael Kors (Nasdaq: KORS) is a $6 billion company today. Investors that bought shares one year ago are sitting on a -13.21% total return. That’s below the S&P 500’s return of 17.39%.
Michael Kors stock is underperforming the market. It’s beaten down, but it reports earnings tomorrow. So is it a good time to buy? To answer this question, we’ve turned to the Investment U Stock Grader. Our Research Team built this system to diagnose the financial health of a company.
Our system looks at six key metrics…
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✓ Earnings-per-Share (EPS) Growth: Michael Kors reported a recent EPS growth rate of 2.47%. That’s above the textiles, apparel and luxury goods industry average of -2.07%. That’s a great sign. Michael Kors’ earnings growth is outpacing that of its competitors.
✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the textiles, apparel and luxury goods industry is 86.41. And Michael Kors’ ratio comes in at 8.03. It’s trading at a better value than many of its competitors.
✓ Debt-to-Equity: The debt-to-equity ratio for Michael Kors stock is 7.97. That’s below the textiles, apparel and luxury goods industry average of 62.01. The company is less leveraged.
✓ Free Cash Flow per Share Growth: Michael Kors’ FCF has been higher than that of its competitors over the last year. That’s good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It’s one of our most important fundamental factors.
✓ Profit Margins: The profit margin of Michael Kors comes in at 20.05% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. Michael Kors’ profit margin is above the textiles, apparel and luxury goods average of 7.17%. So that’s a positive indicator for investors.
✓ Return on Equity: Return on equity gives us a look at the amount of net income returned to shareholders. The ROE for Michael Kors is 39.52%, and that’s above its industry average ROE of 17.77%.
Michael Kors stock passes six of our six key metrics today. That’s why our Investment U Stock Grader rates it as a Strong Buy.
Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth. For more details, click here. …read more
Source:: Investment You
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