Michael Kors Holdings Ltd (NYSE: KORS)
This is one of my favorite seasons of the year, earnings season! Before the market opened this morning, Michael Kors Holdings released their earnings report for the third quarter of fiscal 2016, and the report blew away expectations. So naturally, we saw dramatic gains in the value of the stock throughout the day. Today, we’ll talk about what we saw from the earnings report, how the market reacted to the news, and what we can expect to see from KORS moving forward. So, let’s get right to it…
Michael Kors Blows Away Earnings Expectations
As mentioned above, KORS released its earnings report for the fiscal third quarter of 2016 right on schedule. The results blew away expectations, breathing new light into the stock. Here’s what we saw from the report…
- Earnings Per Share – In terms of earnings per share, KORS absolutely blew away expectations for the third quarter. While analysts expected for the company to produce earnings in the amount of $1.46 per share, the company actually generated earnings in the amount of $1.48 per share for the quarter.
- Top-Line Revenue – As if earnings wasn’t enough, top-line revenue also came in well ahead of expectations. For the quarter, it was expected that revenue would come in at $1.350 billion. However, the company actually reported revenue in the amount of $1.3975 billion; proving a year over year gain in the amount of 6.3%.
- Guidance – Following the earnings report, KORS produced overwhelmingly positive guidance for the fourth quarter of fiscal 2016. For the quarter, the company is expecting to produce earnings between $0.93 and $0.97 per share. In terms of revenue, the company is expecting to produce between $1.13 billion and $1.15 billion for the quarter. While this is lower than the previous quarter, these are strong numbers considering the fact that the previous quarter was the quarter that represented holiday shopping. If KORS does pull off these numbers, they will show strong year over year growth.
How The Market Reacted To The News
As investors, we’ve come to learn that there are few pieces of news that have the potential to move the needle quite like solid earnings does. So naturally, with the solid earnings release along side positive guidance, it only makes sense that we would see gains on KORS today; and that’s exactly what we’re seeing. Currently (2:55), KORS is trading at $50.05 per share after a gain of 24.01% so far today.
What We Can Expect To See Moving Forward
Moving forward, I have a relatively mixed opinion of what we can expect to see moving forward. First and foremost, it’s important to understand that price movement in the market tends to happen through a series of overreactions. While solid earnings do justify gains, I have a hard time wrapping my head around a gain of 24.01% on a single earnings report. With that said, I’m expecting to see a slight correction either tomorrow or Thursday. However, in the long run, I’m expecting to see solid gains. The reality is that KORS has proven time and time again that they have the ability to produce solid gains and continue growing. What more could investors want?
What Do You Think?
Where do you think KORS is headed moving forward? Let us know your opinion in the comments below!