Tumi Stock Takes a Trip Down South

by Alyssa Oursler | August 8, 2013 11:22 am

Tumi Holdings (TUMI[1]) — a company that makes fancy luggage — is heading south today … fast.

The cause: Tumi reported second-quarter earnings after the bell yesterday, and its results fell short of expectations. Here’s a quick sample of the disappointments:

Investors were quick to flee on the news. TUMI stock is currently sitting almost 11% in the red after opening even lower.

Of course, it’s hard to blame the sellers. Before today’s selloff, Tumi stock had booked a 23% year-to-date climb and was trading for 23 times next year’s expected earning, all while five-year growth is only slated for 17% per year. The slightest sign of a slowdown in growth — of which TUMI gave plenty yesterday — was bound to send investors to the exit.

Then again, volatility is par for the course when it comes to this luxury luggage-maker. The stock boasts a beta of 2.93, for example, meaning it’s nearly three times as volatile as the broader market. And for the visual learners out there, just take a look at the stock’s movement over the past 52 weeks.

ycharts_chart (38)

That’s good news for anyone wondering if TUMI’s selloff is a red flag for the broader luxury sector. Instead, it seems that it’s just a matter of the stock having a high bar for growth, and a highly volatile history. High-end names like Michael Kors (KORS[2]) and Fossil (FOSL[3]) seem to suggest discretionary spending, overall, is doing just fine[4].

As of this writing, Alyssa Oursler did not own a position in any of the aforementioned securities.

  1. TUMI: http://studio-5.financialcontent.com/investplace/quote?Symbol=TUMI
  2. KORS: http://studio-5.financialcontent.com/investplace/quote?Symbol=KORS
  3. FOSL: http://studio-5.financialcontent.com/investplace/quote?Symbol=FOSL
  4. is doing just fine: https://investorplace.com/2013/08/michael-kors-vs-fossil-which-is-the-better-post-earnings-buy/

Source URL: https://investorplace.com/2013/08/a-trip-down-south-tumi-stock-tumbles-big-time/
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