After a 27% Surge, Is Tapestry Stock Still Worth Buying?
Note: Tapestry’s FY’24 ended on June 29, 2024.
Luxury fashion house Tapestry (NYSE: TPR) has surged 27% year-to-date, handily beating the S&P 500’s 2% return and outpacing peer Ralph Lauren’s (NYSE: RL) 15% rise. Its momentum is fueled by strong Q3 earnings, standout performance at Coach, and an upward revision to its full-year FY2025 guidance. Management lifted both revenue and EPS targets, citing improving gross margins and traction with younger consumers. See Buy or Sell Tapestry Stock?
Despite this bullish backdrop, TPR stock looks fully priced and possibly overvalued. Trading around $83, it offers limited upside when weighed against the company’s middling long-term fundamentals and past downturn vulnerability. Our analysis – spanning growth, profitability, financial stability, and downturn resilience—paints a mixed picture that ultimately leaves TPR stock looking unattractive. That said, if you seek upside with lower volatility than individual stocks, the Trefis High-Quality portfolio presents an alternative – having outperformed the S&P 500 and generated returns exceeding 91% since its inception.
Tapestry’s Valuation: Reasonable, But Not Compelling
Tapestry may appear modestly valued at first glance, with a price-to-sales ratio of 2.4, a price-to-free cash flow of 18.2, and a price-to-earnings of 21.7—all below the S&P 500 averages. But this discount is less a hidden opportunity and more a reflection of the company’s sluggish growth and merely average profitability.
Tapestry’s revenue has been particularly underwhelming. Tapestry’s three-year compound annual growth rate is just 1.0%, far behind the S&P 500’s 5.5%. While revenue rose 2.7% over the past year to $6.9 billion and Q3 2025 posted an 8% year-over-year gain—beating the S&P’s 4.8%—the longer-term trajectory remains weak for a brand aspiring to premium global status.
Profitability metrics tell a similar story. The company’s 17.9% operating margin is decent, and its 12.5% net income margin edges out the S&P’s 11.6%. Its 14.9% operating cash flow margin matches the benchmark. These are solid, middle-of-the-pack numbers—but not the kind that support a case for multiple expansion.
Financial Stability: Solid Balance Sheet
On a positive note, Tapestry maintains a solid financial foundation, with $4.1 billion in debt against a $17 billion market cap—resulting in a manageable debt-to-equity ratio of 25.3% and a healthy 14.5% cash-to-assets ratio. This financial strength gives the company room to invest, return capital, or navigate short-term headwinds.
Downturn Resilience: A Serious Red Flag
This is where Tapestry’s story takes a clear hit: the stock has consistently underperformed the S&P 500 during major downturns. It dropped 46% during the 2022 inflation shock (vs. the index’s 25% decline), plunged 64% in the 2020 COVID crash (vs. 34%), and sank 78% in the 2008 financial crisis (vs. 57%). While it eventually rebounded each time, the deeper drawdowns highlight a troubling level of volatility, especially concerning in today’s uncertain economic environment. Our dashboard How Low Can Stocks Go During A Market Crash captures how key stocks fared during and after the last six market crashes.
Bottom Line
In summary, Tapestry scores neutral on growth and profitability, strong on financial stability, but very weak on downturn resilience, leaving its overall profile uninspiring. Despite recent gains and a seemingly fair valuation, the stock’s lackluster fundamentals and poor performance in past market shocks make it a risky bet.
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