Which High-End Retail Stock has the Strongest Earnings Trends?

Earnings trends are extremely important when evaluating stocks. At Wall St. Cheat Sheet, we view increasing earnings quarter-over-quarter as a simple way to gauge whether costs and the business model are stable. Then we like to analyze whether the company is outperforming peers in the sector. This is what we call the “E-Squared” investment analysis (‘E = Earnings Are Increasing Quarter-Over-Quarter’ + ‘E = Excellent Relative Performance Versus Peers and Sector’).

Stocks with improving earnings metrics are worthy of your extra attention. Click here to discover our CHEAT SHEET stock picks now!

Here’s your Cheat Sheet to how 5 of the top high-end retail stocks rank via earnings trends:

Michael Kors Holdings (NYSE:KORS): Current Price $61.82

Fiscal Year 2009 2010 2011 2012
Revenue ($) in millions 397.07 508.10 803.34 1,302
Diluted EPS ($) 0.07 0.22 0.40 0.78

There’s solid momentum in Kors’ performance these past four years — revenue is up three times, but EPS has vaulted 10 times.

Next, our CHEAT SHEET investing framework asks us to drill down to the recent quarterly data:

Quarter Dec. 31, 2011 Mar. 31, 2012 Jun. 30, 2012 Sep. 30, 2012 Dec. 31, 2012
Revenue ($) in millions 373.61 379.99 414.86 532.94 636.78
Diluted EPS ($) 0.20 0.22 0.34 0.49 0.64

The quarterly numbers are equally encouraging. We see sustained growth in both sales and EPS quarter-over-quarter. This is one stock to watch…

Polo Ralph Lauren Corp. (NYSE:RL): Current Price $174.17

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 4,880 5,019 4,979 5,660 6,860
Diluted EPS ($) 3.99 4.01 4.73 5.75 7.13

Except for a momentary dip in revenue in 2010, there is otherwise a stellar set of annual numbers from Ralph Lauren.

Next, our CHEAT SHEET investing framework asks us to drill down to the recent quarterly data:

Quarter Dec. 31, 2011 Mar. 31, 2012 Jun. 30, 2012 Sep. 30, 2012 Dec. 31, 2012
Revenue ($) in millions 1,806 1,623 1,593 1,862 1,846
Diluted EPS ($) 1.78 0.99 2.03 2.29 2.31

Have the topline and EPS taken a breather in the latest quarter? Nevertheless, EPS has moved up by a whisker and we’ll keep it in the list of probables for now…

Coach Inc. (NYSE:COH): Current Price $48.40

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 3,181 3,230 3,608 4,159 4,763
Diluted EPS ($) 2.17 1.91 2.33 2.92 3.53

Things are certainly going right for Coach after 2009 as we see nice annual jumps in the topline and in EPS.

Next, our CHEAT SHEET investing framework asks us to drill down to the recent quarterly data:

Quarter Dec. 31, 2011 Mar. 31, 2012 Jun. 30, 2012 Sep. 30, 2012 Dec. 31, 2012
Revenue ($) in millions 1,449 1,109 1,155 1,161 1,504
Diluted EPS ($) 1.18 0.77 0.85 0.77 1.23

After what seemed to be three rather indifferent quarters in the middle there, Coach had a good quarter for sales and improved its EPS. Certainly an eligible stock here…

Phillips-Van Heusen Corp. (NYSE:PVH): Current Price $120.11

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 2,425 2,492 2,399 4,637 5,891
Diluted EPS ($) 3.21 1.76 3.08 0.80 4.36

Sales at Van Heusen have leaped in 2011 and 2012, helped no doubt by intelligent acquisitions, and we note that EPS really took off in 2012.

Next, our CHEAT SHEET investing framework asks us to drill down to the recent quarterly data:

Quarter Oct. 31, 2011 Jan. 31, 2012 Apr. 30, 2012 Jul. 31, 2012 Oct. 31, 2012
Revenue ($) in millions 1,654 1,533 1,427 1,337 1,643
Diluted EPS ($) 1.54 1.11 1.27 1.19 2.24

Quarterly sales were on a decline from October 2011 through July 2012, but improved substantially in October 2012. EPS also improved over the previous quarter.

Steven Madden, Ltd. (NASDAQ:SHOO): Current Price $45.96

Fiscal Year 2007 2008 2009 2010 2011
Revenue ($) in millions 431.05 457.05 503.55 635.42 968.55
Diluted EPS ($) 0.7467 0.6733 1.22 1.78 2.25

Steve Madden grew sales and EPS well these past three years.

Next, our CHEAT SHEET investing framework asks us to drill down to the recent quarterly data:

Quarter Sep. 30, 2011 Dec. 31, 2011 Mar. 31, 2012 Jun. 30, 2012 Sep. 30, 2012
Revenue ($) in millions 313.89 279.76 265.97 288.69 356.88
Diluted EPS ($) 0.74 0.54 0.50 0.61 0.86

We note that the company also did well on the quarterly results, with both revenue and EPS improving nicely quarter-over-quarter. This one, too, makes the grade…

Conclusion:

It’s a toss-up between Michael Kors and Steve Madden, but Michael Kors walks away with the honors due to its sustained growth over the past five quarters compared to Madden.

“E = Earnings Are Increasing Quarter-Over-Quarter” is a core component of our successful CHEAT SHEET investing framework. Don’t waste another minute – click here to discover our CHEAT SHEET stock picks now!