Luxury operator Michael Kors (NYSE:KORS) enjoyed another blowout earnings report Tuesday, and investors are cheering to the tune of 14% gains in midday trading.
Fiscal first-quarter revenues surged by 71% to $414.9 million, and profits came to $68.6 million (34 cents per share), which topped analyst expectations of $365 million and 20 cents per share, as well as the company’s own forecast for the quarter.
The momentum is expected to continue. Michael Kors has raised its full-year guidance for earnings to $1.32 to $1.34 a share, up from the prior forecast of $1.08 to $1.12 a share. Revenues are expected to range from $1.8 billion to $1.9 billion, better than previous guidance of $1.7 billion to $1.8 billion.
Michael Kors has been smart to greatly expand its distribution, such as with in-store shops, company-owned retail locations and licensing deals. At the same time, the company has continued to create must-have apparel; Michael Kors is rapidly becoming an icon luxury brand.
KORS has been nearly flawless since its mid-December IPO — it priced at $20, and has more than doubled in less than a year. But investors should be cautious for that very reason. The company’s run-up has resulted in a hefty P/E of 62 — so just a small drop in the growth rate could make the stock vulnerable to a short-term rattling.
Tom Taulli runs the InvestorPlace blog IPOPlaybook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli. As of this writing, he did not own a position in any of the aforementioned securities.
A long-time follower of the IPO scene, back in 1999 Tom started one of the first sites in the space called WebIPO. It was a place where investors got research as well as access to deals for the dot-com boom. Tom also wrote the top-selling book, Investing in IPOs. In it, he covers all the aspects of analyzing an IPO, such as reading the prospectus, detecting the risk factors and understanding some of the arcane regulations. But don’t worry — if that process is too intimidating for you, thankfully Tom will do the legwork for you right here in the IPO Playbook blog.
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