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Michael Kors: Will The Post-Earnings Stock Declines Ever End?

In a January 24 article I suggested that Michael Kors (K>ORS) would beat top and bottom line fiscal third quarter expectations. This was based on a handbag survey, overblown discounting concerns, and the company's continued growth in Europe and Japan. Turns out I was right, as Michael Kors soundly beat analysts' expectations, but trying to predict the stock's reaction is always more difficult. Thankfully, if a company does well, its stock follows long-term. With regard to Michael Kors, this favorable long-term outcome is almost certain, and the chart below illustrates why.

RL PE Ratio (Forward 1y) data by YCharts

As you can see, Michael Kors trades at the cheapest multiple to next year's earnings expectations between it, Coach (COH), and Ralph Lauren (RL). Essentially, Wall Street doesn't think that Michael Kors is deserving of a higher premium than its peers, or even an equal premium at that.

Ralph Lauren saw… Read More …