Earnings Previews: Tapestry, Walmart
π TPR shares plunged an additional 16% following the announcement of an $8.5 billion cash offer to acquire luxury rival Capri Holdings.
π° Analysts forecast fiscal fourth-quarter revenue of $1.65 billion, up 9.6% sequentially and 1.9% year over year.
π Adjusted EPS is expected to hit $0.97, representing a 23.9% sequential increase and 24.4% year-over-year growth.
π― The median analyst price target of $50.00 suggests a 40.8% upside potential from the recent trading price.
π΅ TPR trades at 9.1 times expected 2023 EPS and offers an annual dividend yield of 3.94%.
π Of the 20 analysts covering the stock, 15 hold Buy or Strong Buy ratings while five hold Hold ratings.
Bullish Signals
- Analysts forecast fiscal fourth-quarter revenue of $1.65 billion, which would be up 9.6% sequentially and by 1.9% year over year.
- Adjusted EPS is expected to reach $0.97, marking a 23.9% sequential increase and a 24.4% year-over-year improvement.
- Of the 20 analysts covering Tapestry stock, 15 have a Buy or Strong Buy rating while the rest have Hold ratings.
- At a recent share price of around $35.50, the stock's implied gain based on a median price target of $50.00 is 40.8%.
Risk Factors
- Shares plunged another 16% immediately after the company announced an $8.5 billion cash offer to acquire competitor Capri Holdings.
- Only one brokerage has downgraded Tapestry's stock since the acquisition announcement, indicating some market skepticism.
Full Analysis
Luxury goods retailer Tapestry Inc. (NYSE: TPR) is set to report earnings on Thursday morning, following a significant market reaction to its announcement of an $8.5 billion cash offer to acquire competitor Capri Holdings. The acquisition news caused TPR shares to plunge another 16% after previously hitting a 52-week high in February, though the stock has since stabilized with only a 0.4% decline over the past year. Investors are questioning whether the initial sell-off was an overreaction, noting that while one brokerage downgraded Tapestry, six have downgraded Capri stock.
Analyst sentiment remains largely positive for Tapestry, with 15 of 20 analysts maintaining Buy or Strong Buy ratings and a median price target of $50.00 implying a 40.8% upside from the recent share price. Forecasts for fiscal fourth-quarter revenue stand at $1.65 billion, representing a 9.6% sequential increase and a 1.9% year-over-year gain. Adjusted EPS is expected to reach $0.97, marking a substantial 23.9% sequential rise and a 24.4% year-over-year improvement.
The valuation metrics for Tapestry reflect a premium multiple relative to its earnings growth, trading at 9.1 times expected 2023 EPS and 8.4 times estimated 2024 earnings of $4.23 per share. The company offers an annual dividend of $1.40, yielding 3.94%, which contrasts with its target Capri Holdings that does not pay a dividend. Over the past year, Tapestry's total shareholder return was 2.73%, significantly trailing Capri's 1.28% but providing income to shareholders.