Moderate Price-to-Earnings Ratio
Strong Gross Profit Margin
Strong Return on Equity
Healthy Operating Profit Margin
Adequate Liquidity Ratios
Strong Interest Coverage
🏆 Strong Brand Performance
🔑 Diverse Product Innovation
📈 Robust Financials
🚀 Growth in Emerging Markets
🔄 Strategic Brand Development
High Price-to-Book Ratio
Elevated EV/EBITDA Ratio
Net Profit Margin Concerns
High Debt Levels
📉 Challenges at Kate Spade
📊 Performance Variability
Tapestry displays strong business quality through its successful brand performance and innovative product strategies, particularly with Coach. Future prospects remain positive, bolstered by growth in international markets and strategic brand development initiatives, although challenges at Kate Spade and Stuart Weitzman highlight the need for careful management. Overall, Tapestry is well-positioned for sustained growth and value creation.
Analysis Date: February 6, 2025
Last Updated: March 12, 2025
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$139.31
Current Market Price: $59.25
IV/P Ratio: 2.35x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
56.99999999999999%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for TPR
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (17.39)
P/B ratio ≤ 1.5 (10.36)
Current ratio ≥ 2.0 (1.58x)
Long-term debt < Net current assets (3.45x)
Margin of safety (56.99999999999999%)
TPR does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
The return on equity (ROE) of 31.86% reflects efficient use of shareholders' equity to generate profits, indicating strong management performance.
With an operating profit margin of 17.52%, the company demonstrates solid operational efficiency, translating revenues into profits effectively.
A net profit margin of 11.74% may indicate that the company is facing challenges in controlling costs or competition, which could affect overall profitability.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
31.86%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-16)
Return on Assets (ROA)
Measures how efficiently a company uses its assets to generate profits
4.28%
Higher values indicate better asset utilization
TTM (as of 2025-04-16)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
72.65%
Higher values indicate better efficiency in production
TTM (as of 2025-04-16)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
11.74%
Higher values indicate better overall profitability
TTM (as of 2025-04-16)
The current ratio of 1.58 and quick ratio of 1.05 indicate that the company can cover its short-term liabilities adequately, suggesting good liquidity.
An interest coverage ratio of 10.08 signifies that the company generates sufficient earnings to cover interest expenses, indicating financial stability.
With a debt-to-equity ratio of 3.07 and a debt-to-assets ratio of 56.63%, the company is heavily leveraged, which may pose risks during economic downturns.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
3.07x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q2 2025
Current Ratio
Current assets divided by current liabilities
1.58x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q2 2025
Tapestry demonstrated strong performance, particularly with Coach, which achieved 10% constant currency revenue gains and increased gross margin by 270 basis points. The brand's ability to attract Gen Z and millennials, who are transacting at higher average unit retail (AUR), highlights its effective brand positioning and execution.
Tapestry's focus on continuous product innovation and creativity has led to the successful introduction of new handbag families that resonate with younger consumers. This not only drives sales but also enhances brand relevance.
The company achieved record quarterly revenue and earnings per share, with a significant free cash flow generation that supports strategic investments and shareholder returns.
Tapestry's international revenue grew by 7%, with particularly strong performance in Europe (42% growth) and a return to growth in Greater China (2%). This indicates a significant runway for further expansion in these regions.
The company is committed to rebuilding and re-establishing Kate Spade's brand relevance through focused execution and targeted marketing efforts. This strategic pivot is expected to unlock new growth opportunities.
Kate Spade's revenue trends declined by 10%, indicating challenges in brand performance. While steps are being taken to address this, it highlights the need for careful execution and time to restore growth.
While Coach shows strong growth, the mixed performance across other brands like Stuart Weitzman (sales down 16%) indicates variability in execution and market reception.