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Tapestry, Inc. (NYSE:TPR): Poised For Long Term Success?

Simply Wall St

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Since Tapestry, Inc. (NYSE:TPR) released its earnings in March 2019, analysts seem cautiously optimistic, with profits predicted to increase by 13% next year relative to the past 5-year average growth rate of -4.9%. With trailing-twelve-month net income at current levels of US$398m, we should see this rise to US$449m in 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

See our latest analysis for Tapestry

What can we expect from Tapestry in the longer term?

Over the next three years, it seems the consensus view of the 30 analysts covering TPR is skewed towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To understand the overall trajectory of TPR's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

NYSE:TPR Past and Future Earnings, June 15th 2019

From the current net income level of US$398m and the final forecast of US$552m by 2022, the annual rate of growth for TPR’s earnings is 12%. This leads to an EPS of $3.41 in the final year of projections relative to the current EPS of $1.39. With a current profit margin of 6.8%, this movement will result in a margin of 8.0% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Tapestry, I've compiled three fundamental aspects you should further examine:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Tapestry worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Tapestry is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Tapestry? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.