Opinions
The Monthly Gems by Allan Tong
Polo Ralph Lauren Corp.
RL-N
TOP PICK
Jun 05, 2023
$112.120
Stock price when the opinion was issued
household goods
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TOP PICK
Stockchase Research Editor: Michael O'Reilly Demand for luxury clothing lines in on the upswing as the ending of pandemic lockdowns welcomes back party gatherings. Recently reported earnings reflected that with EPS that beat expectations by over 60%, while supporting a ROE of 23%. It pays a good dividend yield that is backed by a payout ratio under 40% of cash flow. We recommend a stop loss at $85, looking to achieve $121 -- upside potential over 25%. Yield 2.99% (Analysts’ price target is $121.23)
household goods
BUY
PEG ratio = price/EPS divided by EPS growth rate. Too high and too low a PEG ratio is not good. They reported a surprisingly strong quarter in early November. They can outperform the apparel sector, because their merch is levered to the return to the office. Their Asia business was up 33% on a constant currency business when China was still locked down. PEG ratio under 0.9%. A bargain for a growth stock. Pays a 2.6% yield. His favourite apperel stock for its consistency and management.
household goods
TOP PICK
Ralph Lauren Corporation is a global leader in the design, marketing and distribution of premium lifestyle products in five categories: apparel, footwear & accessories, home, fragrances and hospitality. For more than 50 years, Ralph Lauren's reputation and distinctive image have been consistently developed across an expanding number of products, brands and international markets. The Company's brand names, which include Ralph Lauren, Ralph Lauren Collection, Ralph Lauren Purple Label, Polo Ralph Lauren, Double RL, Lauren Ralph Lauren, Polo Ralph Lauren Children, Chaps and Club Monaco, among others, constitute one of the world's most widely recognized families of consumer brands.
household goods
RL reported in the last week of May an impressive Q4 earnings and revenue beat. On a constant-currency basis, earnings rose 9% YOY. True, North American revenues slipped 3% while comp store sales declined 4% and e-commerce shed 3%. However, the overall North American wholesale business gained 11%. European revenues were -1% YOY, but the stores advanced 8% and online business rose 6%. Take note of Asia with revenues jumping 13% YOY with 20% growth in traditional stores and 19% in the digital business. Adjusted operating expenses increased 3%. EPS clocked in at $0.90, easily beating the expected the $0.61 forecast.