Valuation
Using the 24% growth rate for valuation, with 12% for years 5-10, I arrived at the following value:
Michael Kors is global luxury lifestyle brand led by a renowned and award-winning designer Michael Kors. The company has successfully expanded beyond apparel into accessories (including handbags, small leather goods, eyewear, jewelry and watches) and footwear, with a presence in 74 countries. The company's sales and profits shot up like a rocket along with rising margins. In the recent year, they posted 51% growth in sales and a 66% rise in profits. The stock currently holds a Zacks Rank 2, and is known for positive earnings surprises. EPS estimates have increased from 3.82 90 days ago to 3.92 now. Analysts are predicting 24% EPS growth for the next 5 years. Valuation Using the 24% growth rate for valuation, with 12% for years 5-10, I arrived at the following value: KORS appears to be reasonably valued at current levels. If it can achieve higher growth rates, it's definitely worth more, but I think it can't expand margins that much, so most of it will have to come from rising sales. Investors like Stephen Mandel and Joel Greenblatt still hold the stock. However, I am selling it today because KORS has broken several technical levels on the way down, and I never hold declining momentum stocks. If it resumes it's uptrend, I might be a buyer again, but right now I'm out.
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To make money in stocks you must have the "the vision to see them, the courage to buy them and the patience to hold them". And patience is the rarest of the three. Thomas Phelps Categories
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