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On 29 December 2018, Tapestry, Inc. (NYSE:TPR) released its earnings update. Generally, analyst consensus outlook appear cautiously optimistic, with profits predicted to increase by 3.5% next year relative to the past 5-year average growth rate of -11%. With trailing-twelve-month net income at current levels of US$398m, we should see this rise to US$411m in 2020. Below is a brief commentary around Tapestry’s earnings outlook going forward, which may give you a sense of market sentiment for the company. For those interested in more of an analysis of the company, you can research its fundamentals here.
What can we expect from Tapestry in the longer term?
The longer term view from the 34 analysts covering TPR is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To understand the overall trajectory of TPR’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
This results in an annual growth rate of 9.4% based on the most recent earnings level of US$398m to the final forecast of US$506m by 2022. This leads to an EPS of $3.11 in the final year of projections relative to the current EPS of $1.39. In 2022, TPR’s profit margin will have expanded from 6.8% to 7.6%.
Future outlook is only one aspect when you’re building an investment case for a stock. For Tapestry, I’ve compiled three fundamental aspects you should further research:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Tapestry worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Tapestry is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Tapestry? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.