Just got back from mall. Kors store was busy with quite a few women in there shopping. Maybe 7 or 8. Pretty good for a post lunchtime when the mall is pretty dead. Most other stores were empty and not many people walking around the mall.
This is a very negative trend for Apple and a major event. Why? Consumers will get a much lower monthly fee once their phone is paid off in full. Then they will have to decide to bump it way back up if they upgrade their phone. I guarantee we will see upgrade cycles start to slow as a result.
Consumers will enjoy lower monthly bills and will try to stretch that as long as they can. Rather than upgrade every 1 to 2 years we may begin to see ever 3 to 5 as the norm.
Read the link below. ATT is now eliminating the subsidy which means the consumer has to pay for the phone rather than the carrier absorbing it. Ultimately this is better for the consumer where most would simply opt for a lower phone bill for longer rather than demanding the latest and greatest iphone or android for $500 to $800 paid for over one or two years.
PE is now under 10. 23% of the market cap lost today. $4.50 in earnings this year. Also $4.50 in cash. Back out the cash and you getting it under 9 times earnings. Now it is a possible LBO candidate
As KORS passes under 47 now it is now a smaller market cap than Coach! Interesting considering KORS did about 200M more in revenue in the latest quarter and actually grew top and bottom line. Meanwhile coach continues its sharp revenue and profit DECLINES.
Wall Street thinks Coach is worth more than KORS today? Really? For this to be true KORS will have to actually go from growth to declines in both revenue and profits AND Coach has to at least stabilize if not grow in contrast to its never ending double digit declines.
Either Coach now needs to come down sharply or KORS is so oversold it will bounce. Either way the equilibrium between the two is out of whack today.
Look at the profit margin difference between UA and KORS. Also the SSS. KORS has every retailer beat, bar none. Yet it trades for multiples less than even Coach which has had over 2 years of HEAVY declines in revenue, profit and SSS.
This is just market inefficiency at work. Nothing new. It corrects eventually whether it be directly in the market or via going private LBO or somebody acquiring.
KORS Is now Closing in on just 10 times next years net profit and under 7 times EBiTDA. Typical takeouts are between 7 and 10 times EBITDA. If the market gives you no credit and your are printing cash as KORS is it usually doesn't take long for things to get fixed.
The $1B in cash and no debt make it a prime LBO target as well. LBO operators look for lots of cash in the company and little debt. We shall see. I'm loading up on call options. KORS may be my biggest homerun before 2015 ends. Stock will be somewhere between 75 and 100
SSS stores are slowing because 40% was not sustainable. IT had to slow. Show me any retailer putting up the revenue, profit or SSS growth as KORS is right now. Good luck. There aren't any. Nobody is comping like KORS
there is now chatter of a leveraged buyout. I suspect a takeout price would be in the 80 to 90 range now based on multiple of EBITDA to Enterprise Value typical in LBO's. I won't be surprised if I wake up any morning now with the news should KORS continue to trade at this multiple and their pristine balance sheet with almost $1B in cash and zero debt.
It could. but it could also go to 60 or higher on a short squeeze for no other reason other than trading mechanics.
I just ran the chart of S&P 500 index to see how apple fared over the last 3 years compared to it. I was shocked that apple not only didn't beat the index but is just barely tie to it now. I'm going to bet the next 3 years it underperforms. Go check it out on the 3 year compare. Mindblowing that you could have had the same returns in the index over 3 years and not had to worry about timig your apple top exit and take the tax hit.
There are some very nervous KORS shorts downvoting here hoping and praying I am wrong. I'm never wrong.
A buyout or go private would be well above 80/share. closer to 90 just gets them to fair value. KORS will earn $4.80 next year and a 20 multiple on that (still a discount to its growth rate keep in mind) would be a 96/share take out price.
This is why KORS will start to see action in the buyout or go private if wall street doesn't recognize the value soon. PE firms always do and are more than happy to scoop up massive cash flow machines that are growing like KORS. KORS comps beat every retailer out there every single quarter for 2 years now including last quarter. This includes luxury, affordable luxury and casual.
The stock is merely down because at the moment it wasn't "working" and the charts failed. Chart traders and momentum traders can always blowout stocks well under their fair value since valuation is not relevant to them. This is why PE firms have billionaires who get richer because the market gives gifts. Even at $100 a share any PE firm would be lucky to get this one.
How do you figure that? double digit growth comps, revenue, profits, same store sales and beating estimates every single quarter as public company? they can't control their stock price but they sure doing a fine job growing the business and proving analysts wrong each quarter.
Shareholders will be rewarded when the market either wakes up (and it always does at some point) or they get taken private or acquired for a premium.
Lots of people at the cash register walking out with KORS shopping bags stuffed with product. Stock prices and company performance are often not correlated on wall street over short periods of time.
Witness KORS who has double digit comps every quarter, positive double digit growth top and bottom line, raised guidance every quarter since going public. Proved negative analysts wrong 3 quarters in a row who were claiming they were discounting. Turns out they were all wrong. But for now the stock has not paid attention to reality but it will or some PE firm will take it private soon at a nice number in the 80's or 90's and that will be that.
KORS now trades well under 10x EBITDA so it is firmly a takeout target and if that happens every short will be crushed before they can press the cover trigger
At a multiple ex-cash well under 10 now and Wall Street showing zero love and respect for KORS it could be taken out by Private Equity or simply go private. At this point there is little reason for KORS to be a public company anymore and is very attractive either as a takeover target or as I said by PE and go private.
I think shareholders will see a takeout price should it occur, around 80 to 90/share and at that price whoever gets it steals it as the cash on the balance sheet, growth and cash flow even if it went to zero tomorrow provides a 10% rate of return. Any growth at all to the bottom line just takes it up from there.
Keep in mind (and PE firms will) that KORS has had double digit comps every quarter since going public, revenue and EPS growth in double digits every quarter, beat estimates top and bottom line every single quarter since going public and raised numbers every single quarter since going public. Makes little sense with these facts where the stock price is but Wall Street isn't always rational. It's times like this when PE firms take full advantage of the gifts of Wall Street. You heard it here first.
Just got back from Vegas. KORS store in Cesars was packed. Significantly more people (at least 2x to 6x more) than the other luxury or affordable luxury brand stores in there.
I think with the J&J/Google announcement on robotic surgery and ISRG's technology, patents, etc there is a strong possibility of an acquisition at a substantial premium for ISRG this year. If those guys want to get in the game they have to buy ISRG otherwise patent hurdles and time for FDA approval and doctor acceptance will be at least 7 to 10 years. That's too long. Buy vs build.