What Is Next For Ralph Lauren’s Stock?

-6.17%
Downside
98.84
Market
92.74
Trefis
RL: Ralph Lauren logo
RL
Ralph Lauren

Ralph Lauren’s stock (NYSE: RL), a company engaged in the design, marketing, and distribution of premium lifestyle products, including apparel, accessories, fragrances, and home furnishings, has increased 6% over the last five trading days (one week) and currently stands at around $124. It should be noted that the broader S&P500 returned a 4% growth during the same period. The investors took comfort in reports that cases of the Omicron variant have been relatively mild as compared to the Delta variant. The apparel retail sector, in general, was having weak sessions, before this week, on a combination of Omicron anxiety and new concerns over the impact of Fed tapering or rate hikes.

It should be noted that the retailer saw strong second-quarter results with a beat on both top and bottom lines. It also updated its sales to rise by about 15% over the holiday season, allowing revenue gains to land somewhere between 34% and 36% for the full year. The retailer also lifted its outlook on profit margin and earnings, leading to a significantly improved financial path. Now, is RL stock still poised to grow further? Based on our machine learning analysis of trends in the stock price over the last ten years, there is a 55% chance of a rise in RL stock over the next month (twenty-one trading days). See our analysis on RL Stock Chance Of Rise for more details.

And if you are considering RL stock as an investment option over a longer time frame, you can explore our forecast for RL’s Valuation. We have updated our model following the Q2 release. We now forecast RL’s Revenues to be $5.6 billion for the full year 2022, up 35% y-o-y, compared to a prior 30% y-o-y growth. Looking at the bottom line, we now forecast EPS to come in at $7.51, compared to our earlier estimate of $7.35. Given the changes to our revenues and earnings forecast, we estimate the company’s valuation to come in at $130 per share, based on $7.51 expected EPS and a 17.3x P/E multiple for fiscal 2022. Our Ralph Lauren valuation is almost 5% higher than the current market price. We believe that the company’s stock appears cheap at the current levels.

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[1] Returns of 6.6% or higher over a five-day period in 147 times out of 2516 (6%); Stock rose in the next five days in 79 of these 147 instances (54%)

[2] Returns of -0.1% or lower over ten-day period in 1249 times out of 2516 (50%); Stock rose in the next ten days in 635 of these 1249 instances (51%)

[3] Returns of -3.7% or lower over twenty-one-day period in 702 times out of 2515 (28%); Stock rose in the next twenty-one days in 383 of these 702 instances (55%)

Also, Ralph Lauren Peer Comparisons summarizes how the company fares against peers on metrics that matter.

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Returns Dec 2021
MTD [1]
2021
YTD [1]
2017-21
Total [2]
 LULU Return -9% 22% 555%
 S&P 500 Return 0% 25% 110%
 Trefis MS Portfolio Return 2% 47% 295%

[1] Month-to-date and year-to-date as of 12/9/2021
[2] Cumulative total returns since 2017

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