Last Update 11 Dec 25

Fair value Increased 0.74%

RL: Brand Elevation And Margin Expansion Will Support Durable Earnings Strength

We are nudging our fair value estimate for Ralph Lauren modestly higher to approximately $369.46 from about $366.75 per share, reflecting analysts' incremental price target increases into the mid to high $300s and low $400s range as they cite sustained brand momentum, conservative multi year growth guidance, and improving margin and EPS outlooks.

Analyst Commentary

Recent Street research on Ralph Lauren has tilted decisively positive, with a series of upward price target revisions clustered in the mid to high $300s and one notable target in the low $400s. The updates largely reflect confidence in the durability of brand momentum, operational discipline, and the potential for upside to management's conservative multi year outlook.

Bullish Takeaways

Bullish analysts point to robust brand momentum across all key geographies, supporting the case for sustained low to mid single digit revenue growth and justifying higher valuation multiples.
Multiple firms have raised outer year EPS estimates, citing a combination of margin expansion and better sales visibility. This supports a pathway to earnings outperformance versus current Street expectations.
Commentary around the brand elevation and multi year growth strategy suggests ample runway for premium pricing, mix upgrades, and direct to consumer penetration. Together, these factors underpin structurally higher profitability.
The high end price target in the low $400s, notably from JPMorgan, reflects increasing conviction that current guidance embeds conservatism and that execution on the three year plan can unlock further multiple expansion.

Bearish Takeaways

Bearish analysts, while still generally positive on the story, highlight that the three year plan of mid single digit revenue growth and 100 to 150 basis points of operating margin expansion may cap upside if macro conditions worsen or brand momentum normalizes.
The modest trimming of at least one price target, despite an Overweight stance, signals concern that a significant portion of the operational improvement may already be reflected in the current share price.
There is some caution that the stock has become a relative safe haven within the category. This raises the risk of de rating if execution stumbles or if investor preference rotates away from defensive brand stories.
Conservative guidance, while likely beatable, also reinforces the view that management is prioritizing predictable, profitable growth over aggressive share capture. This could limit near term upside in more bullish market scenarios.

What's in the News

Unveiled Team USA's Opening and Closing Ceremony uniforms for the Milano Cortina 2026 Olympic and Paralympic Games, marking Ralph Lauren's 10th consecutive Games as official outfitter. The collection will roll out across select U.S. and Italian stores, online channels, and a Cortina pop up shop during the Games (company announcement).
Launched Polo Ralph Lauren x TOPA, the fourth Artist in Residence collaboration, blending Indigenous led brand TOPA's craftsmanship with Polo Ralph Lauren's Fall/Holiday 2025 collection. A portion of proceeds will be directed to Thunder Valley Community Development Corporation's Lakota language and education initiatives (company announcement).
Updated Fiscal 2026 guidance to revenue growth of 5% to 7% on a constant currency basis, with an anticipated 200 to 250 basis point tailwind from foreign exchange. The company also projected mid single digit constant currency revenue growth in the third quarter, aided by a 150 to 200 basis point FX benefit (company guidance).
Continued capital returns via share repurchases, buying back 218,554 shares for $63.16 million between late September and early November 2025. This brings total buybacks under the 2018 authorization to over 24.3 million shares and $3.06 billion (company buyback update).
Expanded its hospitality portfolio with plans to open The Polo Bar Ralph Lauren in London at 1 Hanover Square in 2028, extending the brand's lifestyle presence alongside its long standing U.K. retail footprint and cultural partnerships such as Wimbledon and The Royal Marsden (company announcement).

Valuation Changes

The fair value estimate has risen slightly to approximately $369.46 per share from about $366.75 per share, reflecting modestly higher long term earnings power assumptions.
The discount rate has edged up slightly to about 8.95% from roughly 8.92%, indicating a marginally higher required return embedded in the valuation.
Revenue growth has slipped fractionally to around 5.12% from approximately 5.14%, suggesting a very small tempering of long term top line expectations.
The net profit margin has increased marginally to roughly 12.72% from about 12.72%, implying a slightly more optimistic view on structural profitability.
The future P/E has risen modestly to about 24.35x from roughly 24.15x, signaling a small uplift in the multiple applied to forward earnings.

Accelerating global expansion, premium brand focus, and digital adoption enhance revenue growth, pricing power, and margin potential through greater efficiency and consumer demand.
Investment in technology, supply chain automation, and new product categories diversifies growth opportunities and supports long-term operating and profit improvements.
Uncertain macro conditions, inflation, and tariff risks threaten revenue and margin growth, with Europe slowing, DTC needing to offset wholesale exits, and rising inventories increasing markdown risk.

Catalysts

About Ralph Lauren

Designs, markets, and distributes lifestyle products in North America, Europe, Asia, and internationally.What are the underlying business or industry changes driving this perspective?

Accelerating international expansion, especially in Asia and Greater China where sales grew over 30% and now represent 9% of company revenue (up from 3-4% a few years ago), positions Ralph Lauren to benefit from rising global wealth and middle-class growth, supporting sustained top-line revenue gains.
Strong digital adoption-including double-digit growth in direct-to-consumer (DTC) digital channels and expansion of live shopping in China-enables higher-margin online sales and greater global reach, which structurally bolsters net margins and future earnings growth.
Premium brand positioning and reduced reliance on discounting continue to increase average unit retail (AUR) by 14% in the quarter, illustrating strengthened pricing power and value perception among consumers who desire quality and authenticity-factors that underpin future gross margin expansion.
Significant investments in technology, AI-driven inventory management, and automated supply chain operations are driving greater operating efficiencies, setting the stage for improved operating margins and inventory turns as scale increases.
Early-stage momentum in high-potential categories like handbags, women's apparel, and luxury accessories-paired with core product strength and expansion of flagship stores in key cities-provide diversified, multi-year growth drivers that can compound revenue and profit growth.

Ralph Lauren Earnings and Revenue Growth

Ralph Lauren Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Ralph Lauren's revenue will grow by 5.0% annually over the next 3 years.
Analysts assume that profit margins will increase from 10.9% today to 12.1% in 3 years time.
Analysts expect earnings to reach $1.0 billion (and earnings per share of $17.51) by about September 2028, up from $794.7 million today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 24.0x on those 2028 earnings, up from 23.6x today. This future PE is greater than the current PE for the US Luxury industry at 19.8x.
Analysts expect the number of shares outstanding to decline by 2.45% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.79%, as per the Simply Wall St company report.

Ralph Lauren Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Management repeatedly cited concerns about the uncertain and potentially inflationary macroeconomic environment (especially in the U.S.), highlighting risks that escalating tariffs and industry-wide price increases may dampen consumer demand and cause greater price sensitivity, which could negatively impact revenue and net margins in coming periods.
The company anticipates a significant deceleration in growth in Europe and the back half of the fiscal year, due both to planned wholesale receipt shifts, lapping of prior year timing benefits, and general macro uncertainty, suggesting that recent growth rates may not be sustainable and posing a risk to long-term revenue growth.
Although North America is currently showing resilience, management acknowledges the wholesale channel remains volatile and plans to exit up to 100 wholesale doors, which-if DTC and new store growth do not fully offset-could limit future revenue growth and expose the company to concentrated market risk.
The company's inventory grew 18% year-over-year (above revenue growth), partly due to strategic pull-forwards in anticipation of tariffs, raising the risk of inventory markdowns or margin pressure if demand softens or macroeconomic conditions worsen.
While recent gross margin gains are attributed to AUR growth and discount pullbacks, management emphasizes cost inflation and tariff pressure as the primary gross margin headwinds, noting that consumer reaction to higher pricing is the big unknown-if consumer price sensitivity increases, this could force higher discounting or limit further price increases, compressing gross margins and earnings.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $340.806 for Ralph Lauren based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $423.0, and the most bearish reporting a price target of just $185.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $8.4 billion, earnings will come to $1.0 billion, and it would be trading on a PE ratio of 24.0x, assuming you use a discount rate of 8.8%.
Given the current share price of $309.79, the analyst price target of $340.81 is 9.1% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

RL: Future Performance Will Depend On Sustained Demand Momentum And Brand Elevation