Michael Kors -KORS -Daily/Monthly - Cheap Valuation Now

May 28, 2015

KORS reported earnings on Wednesday of $0.90 and the stock tumbled to close at $45.93, down from the $60 level earlier in the week. In past chart publications I have been pointing out how unrealistically expensive Michael Kors shares were when compared to the underlying revenues of the company. The multiple of revenues reached a fever pitch at 6.8X's Sales in February 2014. The reason for the change in the multiple? The rate of growth in revenue has contracted from 60% YOY into May 2014 down to 29% YOY into May 2015. Even with the reduced rate of revenue growth, we can still see that profit margins are a very healthy 20%(after-tax) and therefore justifies a PSR of at least 2.0X's sales.

I think it will be an opportunity to get long at the close on Thursday and Friday. If KORS trades lower it will be an even better valuation.

Tim 12:25AM May 28, 2015 45.93 last KORS