COH - Ready to pull the trigger yet?

[tombrown1]

Already thought it through Prince. You want the current EPS - not the one from the annual report.

[Gunnski]

Not to pile on here. But, for easy Investor Terms take a look at this useful site.

InvestorWords.com - Investing Glossary

It clearly explains things like TTM v. Current EPS, in layman's terms for knuckleheads like me. Simply type in EPS in the search engine box.

Enjoy & continue to learn!

[The Prince]

Hi guys. I know, I know - Everybody turns to what's written in the book.

But - when you work towards a future price - you have to take the same basis. if you take YTD EPS, then you'll have to take YTD P/E, YTD Growth Rate, YTD Sales and so on. As an Accountant I strongly advise to take only the annual numbers when considering how much you're willing to pay.

So - In order to get the correct price you have to take the same time point.

hope this helps

[tombrown1]

No Prince. You want to grow the EPS from now - the current EPS. And you want to grow it at a rate that you can predict based on the annual report's growth rate numbers.

The numbers in Phil's equation: EPS, PE, growth rate. The EPS part is the one that you want to grow at a particular rate according to a predicted PE. You want to grow the EPS from NOW, not before.

Hope this helps.

[sanjayshetty]

Since most of you on this thread seem to have done your homework on COH, could any of you help me out by providing a brief about it.
No I'm not interested in the numbers, that I can look up myself. However, things like the general business, who their competitors are, is bags the main component of their business, what's so great about making bags, can't other players in their business do the same, what differentiates them... and what about the management, what's so cool about them. Would really love to learn from your learnings. Thanks for the help in advance.

[adampepp]

I used to be really excited about COH but I'm not so much anymore. The primary reason is that their great MOS value comes from using very high P/E assumptions. If you actually do a DCF analysis of COH, you have to assume a 30% FCF growth rate for the next 10 years to have a sticker value of $50, or about a MOS of $25 (current price). I realistically see COH's fair value at about $23-28, assuming a conservative but realistic 10-15% FCF growth.

Remember, it's best to model a worse/worst case scenario and see what your downside is. To me, there's too much downside and uncertainty risk with COH.

I think this is a good company at fair value, no doubt, but something as fickle as fashion I would only enter with the 50% MOS to protect me. But who knows.. maybe COH might at that level by year end? If that happens, I'm backing up about 10 trucks!

Adam

[tombrown1]

Originally Posted by sanjayshetty

Since most of you on this thread seem to have done your homework on COH, could any of you help me out by providing a brief about it.
No I'm not interested in the numbers, that I can look up myself. However, things like the general business, who their competitors are, is bags the main component of their business, what's so great about making bags, can't other players in their business do the same, what differentiates them... and what about the management, what's so cool about them. Would really love to learn from your learnings. Thanks for the help in advance.

All good questions. What is your opinion? I usually find it best in forums to narrow down your queries and offer an opinion to show that you have done some research. A good place to start is with their annual reports which can be found on their website.

[sanjayshetty]

Originally Posted by adampepp

I used to be really excited about COH but I'm not so much anymore. The primary reason is that their great MOS value comes from using very high P/E assumptions. If you actually do a DCF analysis of COH, you have to assume a 30% FCF growth rate for the next 10 years to have a sticker value of $50, or about a MOS of $25 (current price). I realistically see COH's fair value at about $23-28, assuming a conservative but realistic 10-15% FCF growth.

Remember, it's best to model a worse/worst case scenario and see what your downside is. To me, there's too much downside and uncertainty risk with COH.

I think this is a good company at fair value, no doubt, but something as fickle as fashion I would only enter with the 50% MOS to protect me. But who knows.. maybe COH might at that level by year end? If that happens, I'm backing up about 10 trucks!

Adam

Hi Adam,
Could you share your detailed DCF calculations please.

Thanks,

[sanjayshetty]

Originally Posted by tombrown1

All good questions. What is your opinion? I usually find it best in forums to narrow down your queries and offer an opinion to show that you have done some research. A good place to start is with their annual reports which can be found on their website.

ok let me start by saying how I got into looking at Coach, it came up on my Rule#1 stock screener.

Next I looked up the quarterly transcripts at Coach Inc. (COH) Stock Transcripts -- Seeking Alpha

Next I looked it up here at ROICommunity and saw a lot of people talking about it. I also looked up Phil's site and noticed a lot of positive talk.

However, though the numbers looked good, which is an indication of a MOAT, I wasn't able to put my finger on why this company is doing good, as in why would someone say it has an exceptional moat. I wanted to understand more, so I started chatting with women, since my manly psyche, couldn't get it, I checked around, and guess what in my close circle of women friends I figured that bags consisted a huge part of their personal inventory, I mean like on average each lady friend had atleast 10-15 bags. Ok so I accepted that as a fact I didn't understand, the next interesting thing was that most of my women friends added atleast 4-5 new bags every year. Ok now I was even more surprised/confused.

So I thought let me google, this question out, guess what, here's my google query how many bags does a woman purchase on average in a year - Google Search

and one of the articles I read which says the average women has 21 bags!!!!
Baggage Claim: Does The Average Woman Really Have 21 Handbags?

Ok woman seem to like bags. Thats for certain, and Coach seems to be at the top of the heap in the American market ? Who else makes big money on bags... What makes Coach so unique? What constitutes their MOAT? that's what I really want to understand.... hope someone can help me :-)

Thanks in advance.

edited Psst: After writing the above I found a good link Coach (COH)) which details Coach, however, since it's a wiki sources need to be verified.

[sanjayshetty]

Any ideas why Coach's book value has gone down?

I did notice they are doing buybacks reducing the no. of shares...

On MSN on the Key Ratios page it says:
06/08 $4.50
Whereas last year it was
06/07 $5.13

Thanks in advance