Ralph Lauren’s (NYSE: RL) stock, a company engaged in the design, marketing, and distribution of premium lifestyle products, including apparel, accessories, fragrances, and home furnishings, has increased by almost 9% over the last twenty-one trading days (one month) and currently stands at around $124. While the retailer’s total revenues fell 18% year-over-year (y-o-y) in the recent Q3, RL saw an encouraging rebound in the Asian business (revenues up 14% y-o-y) – considering the ongoing pressures due to Covid-19. Overall, the market outlook for the luxury apparel sector looks positive as the vaccine rollout has gained steam since last month. It should be noted that the broader S&P500 returned close to only 1% growth over the last twenty-one days. Now, is RL stock poised to grow further? We believe that the company’s stock is still undervalued at about 19x consensus fiscal 2022 earnings and that the stock can increase going forward. Specifically, there is a 53% chance of a rise in RL’s stock over the next month (twenty-one trading days) based on our machine learning analysis of trends in the stock price over the last ten years. See our analysis on RL’s Stock Chances of Rise for more details.
5D: RL -0.4%, vs. S&P500 2.9%; Underperformed market
(45% likelihood event)
- Ralph Lauren stock declined 0.4% over a five-day trading period, compared to the broader market (S&P500) rise of 2.9%
- A change of -0.4% or more over five trading days is a 45% likelihood event, which has occurred 1130 times out of 2516 in the last ten years
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10D: RL 4%, vs. S&P500 3.8%; Outperformed market
(17% likelihood event)
- Ralph Lauren stock rose 4.0% over the last ten trading days (two weeks), compared to broader market (S&P500) rise of 3.8%
- A change of 4% or more over ten trading days is a 17% likelihood event, which has occurred 425 times out of 2500 in the last ten years
21D: RL 8.6%, vs. S&P500 1.1%; Outperformed market
(12% likelihood event)
- Ralph Lauren stock rose 8.6% the last twenty-one trading days (one month), compared to the broader market (S&P500) rise of 1.1%
- A change of 8.6% or more over twenty-one trading days is a 12% likelihood event, which has occurred 285 times out of 2458 in the last ten years
While RL stock looks likely undervalued right now, 2020 has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how the stock valuation for Amerco vs Central Garden & Pet shows a disconnect with their relative operational growth. You can find many such discontinuous pairs here.