Coach Is Well Positioned To Yield 32%+Total Return

Investment Thesis
A luxury apparel accessories and lifestyle brand, Coach, Inc. (NYSE: COH) presents an opportunity to consider its stock for investment based on the strong business fundamentals, robust financial position, double-digit expected earnings growth, and cheaper valuations. The stock offers an upside potential of over 28% to hook its fair value of $45 in the next 12-to-18 months, along with a healthy dividend yield of 3.84% on a forward-looking basis.

Source: Author Calculations

Source: Bloomberg
Business Analysis
Global apparel and retail industry have been under pressure since last few years due to weak and inconsistent consumer traffic coupled with cut-throat competition resulting from the macroeconomic vulnerabilities. The level of consumer travel and discretionary spending remained constrained observed a cautionary behavior as the result of the global political and economic instabilities. Despite these macroeconomic headwinds, Coach has been resilient and reported better than expected performance since last few quarters. Its operating results and bottom lines have been showing a robust double-digit growth since the aforementioned period.
According to the most recent first quarter fiscal 2017 results, Coach reported net sales of $1.04 million, a 1% increase from the same period last year. The gross margin expanded by 3% to 68.9% of net sales. The company's sales were offset by approximately 1.5% due to the North American Wholesale... Read more

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