2. Quick InfoQuick Info
Coach, Inc. engages in the design and marketing of fine accessories andCoach, Inc. engages in the design and marketing of fine accessories and
gifts for men and women in the United States and internationally.gifts for men and women in the United States and internationally.
The company’s primary products include handbags, women’s andThe company’s primary products include handbags, women’s and
men’s accessories, footwear, jewelry, wearables, business cases,men’s accessories, footwear, jewelry, wearables, business cases,
sunwear, travel bags, fragrance, and watches.sunwear, travel bags, fragrance, and watches.
Its accessories product line comprises women’s small leather goods,Its accessories product line comprises women’s small leather goods,
including money pieces, wristlets, and cosmetic cases; men’s smallincluding money pieces, wristlets, and cosmetic cases; men’s small
leather goods comprising wallets and card cases; novelty accessories,leather goods comprising wallets and card cases; novelty accessories,
such as time management and electronic accessories; key fobs andsuch as time management and electronic accessories; key fobs and
charms; and women’s and men’s belts. The company’s wearablescharms; and women’s and men’s belts. The company’s wearables
product line consists of jackets, sweaters, gloves, hats and scarves,product line consists of jackets, sweaters, gloves, hats and scarves,
including cold weather and fashion goods for women.including cold weather and fashion goods for women.
Its business cases product line includes computer bags, messenger-styleIts business cases product line includes computer bags, messenger-style
bags, and totes for men.bags, and totes for men.
3. Quick InfoQuick Info
Coach, Inc. also offers luggage and related accessories, such as travelCoach, Inc. also offers luggage and related accessories, such as travel
kits and valet trays; jewelry, including primarily bangle bracelets; andkits and valet trays; jewelry, including primarily bangle bracelets; and
fragrance products comprising perfume sprays, purse sprays, perfumefragrance products comprising perfume sprays, purse sprays, perfume
solids, shimmer powder, body lotion, and lip gloss.solids, shimmer powder, body lotion, and lip gloss.
As of June 27, 2009, the company operated 330 retail and 111 factoryAs of June 27, 2009, the company operated 330 retail and 111 factory
leased stores in North America; 155 Coach-operated department storeleased stores in North America; 155 Coach-operated department store
shop-in-shops, retail stores, and factory stores in Japan; and 28 Coach-shop-in-shops, retail stores, and factory stores in Japan; and 28 Coach-
operated department store shop-in-shops, retail stores, and factoryoperated department store shop-in-shops, retail stores, and factory
stores in Hong Kong, Macau, and Mainland China.stores in Hong Kong, Macau, and Mainland China.
Coach, Inc. sells its products through company-operated stores; theCoach, Inc. sells its products through company-operated stores; the
Internet; and the Coach catalog, as well as through wholesaleInternet; and the Coach catalog, as well as through wholesale
department stores, specialty stores, international department stores,department stores, specialty stores, international department stores,
and freestanding store locations.and freestanding store locations.
The company was founded in 1941 and is headquartered in New York,The company was founded in 1941 and is headquartered in New York,
New York.New York.
4. Recent NewsRecent News
(MarketWatch, Otc 20(MarketWatch, Otc 20thth
)- Coach eyes further China Expansion (1.33+)- Coach eyes further China Expansion (1.33+
Billion population). Coach plans to open its first flagship shop inBillion population). Coach plans to open its first flagship shop in
China, a 7,000 square foot store in Shanghai next year, and open anChina, a 7,000 square foot store in Shanghai next year, and open an
Asian distribution center to support and tap into demand in theAsian distribution center to support and tap into demand in the
world’s third-largest economy.world’s third-largest economy.
THE MONEY IS IN CHINA, THEY ARE GOING WHERE THETHE MONEY IS IN CHINA, THEY ARE GOING WHERE THE
MONEY IS!!!!MONEY IS!!!!
(MarketWatch, Otc 20(MarketWatch, Otc 20thth
)- Coach plans to make “significant investment”)- Coach plans to make “significant investment”
in marketing during the holidayin marketing during the holiday
(MarketWatch, Otc 20(MarketWatch, Otc 20thth
)- Coach is introducing accessories under $100)- Coach is introducing accessories under $100
to complement its handbag offeringsto complement its handbag offerings
(MarketWatch, Otc 20(MarketWatch, Otc 20thth
)- Frankfurt estimated the total marker for)- Frankfurt estimated the total marker for
imported bags and accessories in China grew by 40%imported bags and accessories in China grew by 40%
5. Recent NewsRecent News
(MarketWatch, Otc 20(MarketWatch, Otc 20thth
)- Coach profit, exceeds estimates. Sales rose to)- Coach profit, exceeds estimates. Sales rose to
$761.4 million in the quarter ended Sept. 26$761.4 million in the quarter ended Sept. 26thth
from $752.5 million a yearfrom $752.5 million a year
earlier.earlier.
(MarketWatch, Sep 1st)- Coach raised to a buy by Merrill Lynch.(MarketWatch, Sep 1st)- Coach raised to a buy by Merrill Lynch.
Coach was upgraded to a buy from neutral Bank of America-MerrillCoach was upgraded to a buy from neutral Bank of America-Merrill
Lynch Tuesday. TheLynch Tuesday. The upscale handbag seller has implemented aupscale handbag seller has implemented a
near-term strategy of lowering prices that's off to a successfulnear-term strategy of lowering prices that's off to a successful
start, the brokerage firm said in a research note. Coach hasstart, the brokerage firm said in a research note. Coach has
introduced the Poppy collection and tweaked its existingintroduced the Poppy collection and tweaked its existing
products that resulted in half of its assortments priced belowproducts that resulted in half of its assortments priced below
$300, the note said.$300, the note said.
6. ValuationValuation
Beta: 1.76Beta: 1.76
Risk-adjusted discount rate: 17.84Risk-adjusted discount rate: 17.84
EPS(ttm): 1.918EPS(ttm): 1.918
Expected growth for next 5 years: 13.08%Expected growth for next 5 years: 13.08%
MoneyChimp Sock Value per Share: $19.34MoneyChimp Sock Value per Share: $19.34
Last Trade(10/29/09): $32.87Last Trade(10/29/09): $32.87
Beta looks at history, and not always an accurateBeta looks at history, and not always an accurate
predictor of the futurepredictor of the future
Beta doesn’t account for changes in the works such asBeta doesn’t account for changes in the works such as
new lines of business or industry trendsnew lines of business or industry trends
7. The Numbers/Valuation/TargetThe Numbers/Valuation/Target
Last Trade(10/29/09): $32.87Last Trade(10/29/09): $32.87
MoneyChimp Value: $19.34MoneyChimp Value: $19.34
SmartMoney Stock Valuation: $42.00SmartMoney Stock Valuation: $42.00
MarketWatch (Average Target Price): $39.00MarketWatch (Average Target Price): $39.00
Barclays Capital Price Target: $40Barclays Capital Price Target: $40
S&P NetAdvantage 12-Mo. Target: $ 42.00S&P NetAdvantage 12-Mo. Target: $ 42.00
P/E ratio of COH is 17.14, and the industry average isP/E ratio of COH is 17.14, and the industry average is
18.25. This can mean that COH might be undervalued18.25. This can mean that COH might be undervalued
because..because..
EPS (ttm) is 1.918, where as the Industry average EPS (ttm)EPS (ttm) is 1.918, where as the Industry average EPS (ttm)
is only .52, COH heavily outperforms the industryis only .52, COH heavily outperforms the industry
12. RecommendationsRecommendations
Standards&Poor’s: 5 Stars (Strong Buy)Standards&Poor’s: 5 Stars (Strong Buy)
MSN MoneyCenteral Stock Scouter: 10/10MSN MoneyCenteral Stock Scouter: 10/10
Smartmoney: Strong Buy’s & Hold, No Sell’sSmartmoney: Strong Buy’s & Hold, No Sell’s
Merill Lynch: Raised to a BuyMerill Lynch: Raised to a Buy
13. Growth Estimates (YahooGrowth Estimates (Yahoo
Finance)Finance)
Past 5 Years: 21.506%Past 5 Years: 21.506%
Current Quarter: 7.5%Current Quarter: 7.5%
Next Quarter: 10.5%Next Quarter: 10.5%
This Year: 7.9%This Year: 7.9%
Next Year: 9.7%Next Year: 9.7%
Next 5 Years: 13.08%Next 5 Years: 13.08%
14. Why does it Sizzle?Why does it Sizzle?
The most recent quarterly earnings report was significantly higher thanThe most recent quarterly earnings report was significantly higher than
analysts’ consensus forecast.analysts’ consensus forecast.
Shares are under heavy accumulation by financial institutionsShares are under heavy accumulation by financial institutions
China has a population of over 1.33 billion, and Coach will have aChina has a population of over 1.33 billion, and Coach will have a
7,000 square foot flagship store in Shanghai by next year. CHINA IS7,000 square foot flagship store in Shanghai by next year. CHINA IS
WHERE THE MONEY IS!!!!WHERE THE MONEY IS!!!!
Significant investment in marketing for the Christmas SeasonSignificant investment in marketing for the Christmas Season
Coach’s profits exceeded estimates in the quarter ended Sept. 26Coach’s profits exceeded estimates in the quarter ended Sept. 26thth
Undervalued and Outperforms IndustryUndervalued and Outperforms Industry
Strong BuyStrong Buy
Great Growth AheadGreat Growth Ahead
