I have never used that metric when assessing a growth stock...earnings and growth rate are a better barometer....
2.3 million Instagram followers is dwarfed by 14 million Facebook friends. KORS is making a high rate of conversions from social media...
The low of $87.70 undercuts the low posted last week ($87.95). Will KORS trade below the low today?
It looks like it may trade down to its 10 week line ($86) or even fill the gap at $83.06? Typically, when it trades below the 10 week line it is a buying opportunity.
There has been some distribution in KORS recently. On May 29 the stock traded down $4.73 with 8 million shares exchanged. On June 16 the stock dropped $3.61 with 5.5 million shares traded, and on June 19 it sank $1.46 with 4.5 million shares exchanged. That is quite a bit of selling pressure on this stock, and the pull back has come on above average volume. It is not a fire sale but some distribution.
LeBron James made $30 million on the Beats deal. He did not own any of the company.
But, he made a deal with Dr. Dre that he would endorse the Beats product for a fee.
Lebron James is a pretty smart guy. So is Dr. Dre... by the way...he is not a real doctor (M.D.)!
For me, it is all about the institutions, and not the analysts...
Sometimes stocks just have to correct. Look at CELG and GILD from February to April. Those two had stellar reports and still sold off.
Some institutions have owned KORS since the $40's and it has become a two bagger and a larger part of their portfolio. It is wise to trim some at that point and look around for other opportunities. So they sell! Not a big deal. Many stocks make their big run after their greatest earnings growth period has concluded. KORS will no longer grow at triple digits. In fact, they will "slow" to 20-30% in the future. The stock could still have a huge run at that growth rate.
The short interest has picked up recently, and I would imagine it will continue to increase as shorts become emboldened with the stocks weakness. KORS business is good, and they are taking share.
Why does Under Armour get a multiple of 75 when KORS is at 27? KORS is growing twice as fast as UA.
Strange stuff indeed...
KORS earned $1.97 in 2013 and $3.22 in 2014! In May they guided to $3.91 in fiscal 2015. That was a disappointment to me as I thought they would guide to $4! But, it does set them up for huge beats all year. I believe they will earn closer to $5 than $4.
Do you think they will go from growing at $65% in 2014 to 20% in 2015? I do not...especially the way they are opening new stores.
Everybody is freaking out because the stock price is coming in. Peter Lynch loved it when quality stocks were on sale. Check CELG or GILD earlier in the year. They are quality companies that were trading at a 20% discount. Now, they are making new highs. I own both...
I do not pay much attention to talking heads as they all have an agenda, and none of them are to help me make money. Do your own due diligence here.
The obsession over KORS gross profit margin is over the top. Most stocks I have ever owned (there have been many) the focus is on the top and bottom lines. KORS enjoys some gaudy margins in retail (which typically enjoy high margins) and management has cautioned their margins will "normalize" like most other retailers, and that appears to be happening. Instead of having 60% gross margins, they may "normalize" to 55% which is still better than most retailers. They also warned their same store sales will "normalize" as well...duh! No retailers has 26% same store sales forever.
Here is a definition from Investopedia...
The gross margin is not an exact estimate of the company's pricing strategy but it does give a good indication of financial health. Without an adequate gross margin, a company will be unable to pay its operating and other expenses and build for the future. In general, a company's gross profit margin should be stable. It should not fluctuate much from one period to another, unless the industry it is in has been undergoing drastic changes which will affect the costs of goods sold or pricing policies.
For example, suppose that ABC Corp. earned $20 million in revenue from producing widgets and incurred $10 million in COGS-related expense. ABC's gross profit margin would be 50%. This means that for every dollar that ABC earns on widgets, it really has only $0.50 at the end of the day.
This metric can be used to compare a company with its competitors. More efficient companies will usually see higher profit margins.
Things to Remember
The results may skew if the company has a very large range of products.
This is very useful when comparing against the margins of previous years.
A 33% gross margin means products are marked up 50% and so on.
KORS is being more promotional, and their margins will "normalize" as they have been saying for years. They still have extremely healthy margins, and that may even improve as they generate more revenue from Europe and Asia. I believe the discounting of older inventory will generate more revenue than even the most optimistic bull would imagine. It would not surprise me to see over $1 billion in revenue this quarter.
I believe they low-balled guidance in May so they can beat estimates all year. They have never missed and will not this quarter. Remember, Easter, Mother's Day, and Graduation were all this. Quarter. My Instagram and Twitter feeds tell me this is a good quarter.
Last Thursday, John Idol said, "I did a terrible job of explaining SG&A (margins) and plan to do a better job in August." I get the sense he will be really specific at the conference call in May, and some of their previous expenditures may bear fruit this quarter? Nobody knows how Wall Street will react. I do know KORS will continue to take market share from Coach in North America.
They are closing 70 stores AND guides lower. The stock sells off as it should.
KORS sold off as well. Does that make sense? Coach is doing lousy so KORS is too?
It seems to me Coach is losing business to Michael Kors, and the sell off provides a buy opportunity?
KATE rallied 3% and has momentum...
To me it means that CELG is confident in its business/pipeline going forward.
A firm does not split their stock if things are not going well....