Fashion brand Michael Kors Holdings Ltd (NYSE:KORS) doesn’t report earnings until Wednesday morning. But for KORS stock investors, in front of the quarterly release, let’s take a look for clues as to whether the reaction proves bullish, bearish or simply a non-event.
To do this, we’ll look at Michael Kors stock’s recent quarterly announcements, analyst views, KORS price chart and what, if anything, the options market is estimating in front of the earnings report.
KORS Stock Earnings Picture
In front of Michael Kors’ Wednesday morning first-quarter earnings release, Wall Street’s analyst community is forecasting profits of 74 cents per share of KORS. Views range from 71 cents to 79 cents.
On the one hand, the current consensus estimate compares to last year’s same-quarter result of 87 cents for an estimated decline of 15% gain. On the other hand, full-year profit views see KORS stock growing its bottom line by 3.6% with earnings of $4.60 per share.
On the sales side, KORS’ revenues are expected to slip to $956.4 million versus 2015’s Q1 result of $986 million. Sequentially, and unsurprisingly, a decline of $243.6 in revenues is estimated following Q4’s holiday season.
Full year sales forecasts for KORS stock in 2017 are for flat year-over-year revenues of $4.7 billion. Looking into 2018, analysts expect a modest sales increase of roughly $100 million on revenues of $4.83 billion.
Buy, Sell or Hold KORS Stock?
Of 26 analysts polled by CNN Money, six firms have “buy” recommendations on KORS stock. One analyst has an “outperform” rating. The remainder and a majority of outfits, 19 in total, maintain a “hold” on Michael Kors.
The median price target on KORS is roughly 4% above current levels at $54 per share, while views range from a low of $45 to a high of $75.
Meanwhile, KORS stock has established a strong record of beating Street profit views. Over the past 12 quarters, the company has topped estimates 91% of the time with 11 beats and one earnings match.
Investor reaction in shares of KORS has proven a mostly favorable, but with a large helping of volatility. KORS stock has produced four decent size price gains compared to one dizzying and one contained loss in the earnings report’s immediate aftermath.
Working backward, Michael Kors stock has registered moves of 6.62%, 23.91%, 8.27%, 10.84%, -24.20% and -2.26% over the past several quarters.
The overall investor reaction in KORS translates into an average gain of 3.86% with substantial price variability, or dispersion of 16.14%, based on a one standard deviation reading.
KORS stock’s weekly performance is a bit more firm: Compared to the one-day result, shares have moved higher by an average of 7.5% with a 15.8% standard deviation.
KORS Stock Weekly Chart
Click to Enlarge
In fact, and after reviewing the KORS weekly view of the past three years, a trendy bullish period followed by an equally out-of-favor bearish move is a textbook example of this cyclical phenomenon.
Currently, and after moving through up and down cycles, 2016 is presenting KORS investors with a new period of rising prices.
Overall price action in KORS is taking on the shape of a fresh, albeit sometimes volatile, uptrend. Failing a pattern breakdown below $45, our technical view is Michael Kors stock could fetch as much as $65 by the end of year.
KORS Stock Options Pricing
In Monday’s first half, shopping activity in KORS options is fairly quiet. Nevertheless, we can determine traders are collectively pricing in a 68% chance shares will remain in a range from a low of $45.25 to a high of $56.25 through Friday versus a current price of $50.75.
The math behind the KORS stock price range calculation were based on the at-the-money weeklys Aug. 12 $51 straddle market, which trades on implied volatility of 103.5% and expires in four trading sessions.
The weeklys contract is the purest play on the KORS earnings event due to its short maturity. As much, the pricing of these calls and puts can give insight as to what other traders expect in shares of KORS following the quarterly announcement.
On a percentage basis, the expected dollar move, up or down in KORS stock, works out to about 10.8% by Friday’s close. Bottom line, while the anticipated move is certainly volatile — relative to recent earnings reactions in Michael Kors stock, the pricing is also very ordinary.
Investment accounts under Christopher Tyler’s management do not currently own positions in any of the securities or their derivatives mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT.
