Tapestry is set to report its fiscal third-quarter results, with expectations of surpassing revenue and earnings estimates. The company plans to acquire Capri Holdings in an $8.5 billion deal financed through debt, creating a portfolio of luxury brands that includes Coach, Kate Spade, Stuart Weitzman, Versace, Jimmy Choo, and Michael Kors. Despite a strong quarter for the Coach brand, sales at Kate Spade and Stuart Weitzman saw declines in Q2. International revenue growth, particularly in Greater China, has been a key driver for Tapestry, with the luxury market in China showing strong recovery post-pandemic.
The stock performance of TPR has been inconsistent, with returns fluctuating in recent years. While it outperformed the S&P 500 in 2021, it underperformed in 2022 and 2023. The uncertainty in the macroeconomic environment, including high oil prices and elevated interest rates, raises questions about the stock’s performance in the future. Analysts believe TPR’s valuation is around $47 per share, which is 21% higher than the current market price. This indicates potential growth opportunities for the company in the coming quarters.
Trefis forecasts Tapestry’s Q3 2024 revenues to be around $1.6 billion, slightly above consensus estimates. The company reported sales of $2.1 billion in Q2, with full-year revenue expectations of $6.7 billion and earnings per share of $4.20 to $4.25, marking an 8-9% year-over-year increase. TPR’s Q3 2024 earnings per share is projected to be $1.45, slightly below consensus estimates, but the company’s operating margin improved by 220 basis points year-over-year. These factors are expected to drive growth in earnings during the third quarter.
With an EPS estimate of $4.23 and a P/E multiple of 11.2x in fiscal 2024, Trefis estimates Tapestry’s stock price to reach $47, indicating a 21% potential upside from the current market price. Comparisons with peers in the industry show Tapestry’s stock performance against its competitors. The company’s growth prospects and potential for outperforming the market in the future make it an attractive investment option. The upcoming fiscal Q3 results and the completion of the Capri Holdings acquisition will likely play a crucial role in determining Tapestry’s future stock performance. Investors will be closely monitoring these developments to assess the company’s growth trajectory in the luxury goods market.
