TPR - Embedded Expectations Analysis - 2020 02 20
Tapestry, Inc. (TPR:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 16.0x Uniform P/E, implying expectations for profitability to fall to historically low levels. Although management's concerns about the novel coronavirus, Coach, and marketing suggest the potential for near-term headwinds, market expectations are far too bearish, suggesting longer-term upside is likely warrantedSpecifically, management may be concerned about the negative impact of the novel coronavirus on business in China and they may lack confidence in their ability to drive positive momentum at Coach and improve their operating model following their business-wide review. Moreover, they may be exaggerating their ability to reengage core Kate Spade customers, improve their in-store shopping experiences, and build on momentum from their soft launch on Tmall. Furthermore, management may be overstating the success of marketing efforts, such as their Thanksgiving Day Parade float, their New Year's Eve Times Square billboard, and their global digital content
However, given the firm's focus on premium brands, market expectations for Uniform ROA to decline to historically low levels appear too bearish. As such, longer-term outperformance is likely warranted for TPR
Tapestry is a lifestyle company. The company's primary product offerings, manufactured by third-party suppliers, include women's and men's bags, small leather goods, footwear, ready-to-wear including outerwear, watches, weekend and travel accessories, scarves, eyewear, fragrance, jewelry and other lifestyle products. The company has three reportable segments: Coach, which includes sales of Coach brand products to customers through Coach operated stores; Kate Spade, which includes sales primarily of Kate Spade New York brand products to customers through Kate Spade operated stores; and Stuart Weitzman, which includes sales of Stuart Weitzman brand products primarily through Stuart Weitzman operated stores.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.