Note: Tapestry’s FY’22 ended on July 2, 2022.
Tapestry (NYSE: TPR), a luxury goods retailer of handbags, shoes, and accessories under the Coach, Kate Spade, and Stuart Weitzman brands, is scheduled to report its fiscal first-quarter results on Thursday, November 10. We expect the apparel retailer stock to trade higher post the fiscal Q1 release with revenues and earnings beating expectations marginally. Despite the increase in transportation costs and higher inflationary pressures, annual revenue and earnings have performed very well in the fiscal year 2022, continuing the positive trend following the recovery from the year of the pandemic.
For the fiscal year of 2023, the company expects total revenue to increase about 3.3% year-over-year (y-o-y) to $6.9 billion, compared to a median forecast by analysts of $6.88 billion. The company expects earnings per share to rise about 9.5% to 12.4% y-o-y and reach a range of $3.80 to $3.90, compared to a median analyst forecast of $3.91.
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Our forecast indicates that Tapestry’s valuation is around $34 a share, which is 5% higher than the current market price. Look at our interactive dashboard analysis on Tapestry’s Earnings Preview: What To Expect in Fiscal Q1? for more details.
(1) Revenues expected to be slightly ahead of consensus estimates
Trefis estimates TPR’s Q1 2023 revenues to be around $1.54 Bil, marginally ahead of the consensus estimate. In Q4, the company’s revenue was flat year-over-year (y-o-y) to $1.62 billion. For the full year, we now forecast Tapestry Revenues to be $7 billion for fiscal 2023, up 4.5% y-o-y. The company set some ambitious targets for FY 2025, forecasting $8 billion in revenue by that time along with over $5 in EPS by that period. Each of its three brands is also expected to retain strong margins through the next three years for an overall operating margin in the area of 19%, 100 basis points above FY 2022 levels.
2) EPS likely to marginally beat the consensus estimates
TPR’s Q1 2023 earnings per share (EPS) is expected to be 77 cents per Trefis analysis, slightly above the consensus estimate of 75 cents. In Q3, the retailer’s adjusted earnings per share (EPS) came in at 78 cents, up 20% y-o-y.
(3) Stock price estimate higher than the current market price
Going by our Tapestry’s Valuation, with an EPS estimate of around $3.88 and a P/E multiple of close to 8.8x in fiscal 2023, this translates into a price of $34, which is 5% higher than the current market price.
It is helpful to see how its peers stack up. TPR Peers shows how Tapestry’s stock compares against peers on metrics that matter. You will find other useful comparisons for companies across industries at Peer Comparisons.
With inflation rising and the Fed raising interest rates, Tapestry has fallen 20% this year. Can it drop more? See how low can TPR stock go by comparing its decline in previous market crashes. Here is a performance summary of all stocks in previous market crashes.
|S&P 500 Return||-1%||-20%||71%|
|Trefis Multi-Strategy Portfolio||-3%||-24%||200%|
 Month-to-date and year-to-date as of 11/9/2022
 Cumulative total returns since the end of 2016
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