RALPH LAUREN CORP (RL) Stock Fundamental Analysis
NYSE:RL - New York Stock Exchange, Inc. - US7512121010 - Common Stock - Currency: USD
We assign a fundamental rating of 6 out of 10 to RL. RL was compared to 48 industry peers in the Textiles, Apparel & Luxury Goods industry. RL scores excellent points on both the profitability and health parts. This is a solid base for a good stock. RL has a expensive valuation and it also scores bad on growth.
1. Profitability
1.1 Basic Checks
RL had positive earnings in the past year.
RL had a positive operating cash flow in the past year.
In multiple years RL reported negative net income over the last 5 years.
Of the past 5 years RL 4 years had a positive operating cash flow.
1.2 Ratios
The Return On Assets of RL (9.95%) is better than 77.08% of its industry peers.
RL has a Return On Equity of 27.75%. This is amongst the best in the industry. RL outperforms 81.25% of its industry peers.
The Return On Invested Capital of RL (15.55%) is better than 77.08% of its industry peers.
RL had an Average Return On Invested Capital over the past 3 years of 12.08%. This is in line with the industry average of 13.45%.
The 3 year average ROIC (12.08%) for RL is below the current ROIC(15.55%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 9.95% | ||
| ROE | 27.75% | ||
| ROIC | 15.55% |
ROA(3y)8.42%
ROA(5y)5.8%
ROE(3y)23.85%
ROE(5y)16.23%
ROIC(3y)12.08%
ROIC(5y)8.89%
1.3 Margins
With an excellent Profit Margin value of 10.14%, RL belongs to the best of the industry, outperforming 83.33% of the companies in the same industry.
RL's Profit Margin has improved in the last couple of years.
RL's Operating Margin of 13.70% is amongst the best of the industry. RL outperforms 83.33% of its industry peers.
In the last couple of years the Operating Margin of RL has grown nicely.
RL's Gross Margin of 68.08% is amongst the best of the industry. RL outperforms 93.75% of its industry peers.
RL's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 13.7% | ||
| PM (TTM) | 10.14% | ||
| GM | 68.08% |
OM growth 3Y40.1%
OM growth 5Y1.65%
PM growth 3YN/A
PM growth 5Y7.38%
GM growth 3Y0.54%
GM growth 5Y1.6%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), RL is creating some value.
RL has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.
2.2 Solvency
RL has an Altman-Z score of 5.46. This indicates that RL is financially healthy and has little risk of bankruptcy at the moment.
With an excellent Altman-Z score value of 5.46, RL belongs to the best of the industry, outperforming 87.50% of the companies in the same industry.
RL has a debt to FCF ratio of 1.32. This is a very positive value and a sign of high solvency as it would only need 1.32 years to pay back of all of its debts.
RL has a better Debt to FCF ratio (1.32) than 83.33% of its industry peers.
RL has a Debt/Equity ratio of 0.39. This is a healthy value indicating a solid balance between debt and equity.
With a Debt to Equity ratio value of 0.39, RL perfoms like the industry average, outperforming 52.08% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.39 | ||
| Debt/FCF | 1.32 | ||
| Altman-Z | 5.46 |
ROIC/WACC1.55
WACC10.06%
2.3 Liquidity
A Current Ratio of 1.76 indicates that RL should not have too much problems paying its short term obligations.
RL's Current ratio of 1.76 is in line compared to the rest of the industry. RL outperforms 43.75% of its industry peers.
RL has a Quick Ratio of 1.31. This is a normal value and indicates that RL is financially healthy and should not expect problems in meeting its short term obligations.
RL has a Quick ratio of 1.31. This is comparable to the rest of the industry: RL outperforms 58.33% of its industry peers.
The current and quick ratio evaluation for RL is rather negative, while it does have excellent solvency and profitability. These ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.76 | ||
| Quick Ratio | 1.31 |
3. Growth
3.1 Past
RL shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 19.48%, which is quite good.
RL shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 13.66% yearly.
EPS 1Y (TTM)19.48%
EPS 3Y13.92%
EPS 5Y13.66%
EPS Q2Q%32.75%
Revenue 1Y (TTM)N/A
Revenue growth 3YN/A
Revenue growth 5YN/A
Sales Q2Q%8.25%
3.2 Future
The Earnings Per Share is expected to grow by 6.60% on average over the next years.
Based on estimates for the next years, RL will show a small growth in Revenue. The Revenue will grow by 3.96% on average per year.
EPS Next Y12.94%
EPS Next 2Y12.05%
EPS Next 3Y10.47%
EPS Next 5Y6.6%
Revenue Next Year4.13%
Revenue Next 2Y4.25%
Revenue Next 3Y4.57%
Revenue Next 5Y3.96%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
RL is valuated rather expensively with a Price/Earnings ratio of 22.23.
Based on the Price/Earnings ratio, RL is valued a bit more expensive than the industry average as 62.50% of the companies are valued more cheaply.
When comparing the Price/Earnings ratio of RL to the average of the S&P500 Index (25.82), we can say RL is valued inline with the index average.
The Price/Forward Earnings ratio is 19.68, which indicates a rather expensive current valuation of RL.
RL's Price/Forward Earnings is on the same level as the industry average.
RL's Price/Forward Earnings ratio indicates a similar valuation than the S&P500 average which is at 21.76.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 22.23 | ||
| Fwd PE | 19.68 |
4.2 Price Multiples
62.50% of the companies in the same industry are cheaper than RL, based on the Enterprise Value to EBITDA ratio.
RL's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 16 | ||
| EV/EBITDA | 13.8 |
4.3 Compensation for Growth
The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
The excellent profitability rating of RL may justify a higher PE ratio.
PEG (NY)1.72
PEG (5Y)1.63
EPS Next 2Y12.05%
EPS Next 3Y10.47%
5. Dividend
5.1 Amount
RL has a Yearly Dividend Yield of 1.20%.
RL's Dividend Yield is a higher than the industry average which is at 3.59.
With a Dividend Yield of 1.20, RL pays less dividend than the S&P500 average, which is at 2.36.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.2% |
5.2 History
The dividend of RL has a limited annual growth rate of 4.76%.
RL has paid a dividend for at least 10 years, which is a reliable track record.
RL has not decreased its dividend in the last 3 years.
Dividend Growth(5Y)4.76%
Div Incr Years3
Div Non Decr Years3
5.3 Sustainability
28.10% of the earnings are spent on dividend by RL. This is a low number and sustainable payout ratio.
The dividend of RL is growing, but earnings are growing more, so the dividend growth is sustainable.
DP28.1%
EPS Next 2Y12.05%
EPS Next 3Y10.47%
274.08
-3.34 (-1.2%)
Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupConsumer Durables & Apparel
GICS IndustryTextiles, Apparel & Luxury Goods
Earnings (Last)
Earnings (Next)
Inst Owners104.84%
Inst Owner Change-0.75%
Ins Owners1.92%
Ins Owner Change-4.65%
Market Cap16.93B
Analysts79.26
Price Target276.98 (1.06%)
Short Float %7.02%
Short Ratio2.41
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.2% |
Yearly Dividend3.02
Dividend Growth(5Y)4.76%
DP28.1%
Div Incr Years3
Div Non Decr Years3
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)3.36%
Min EPS beat(2)2.48%
Max EPS beat(2)4.24%
EPS beat(4)3
Avg EPS beat(4)3.16%
Min EPS beat(4)-0.14%
Max EPS beat(4)6.05%
EPS beat(8)7
Avg EPS beat(8)10.16%
EPS beat(12)11
Avg EPS beat(12)11.07%
EPS beat(16)15
Avg EPS beat(16)30.92%
Revenue beat(2)1
Avg Revenue beat(2)1.62%
Min Revenue beat(2)-0.12%
Max Revenue beat(2)3.35%
Revenue beat(4)1
Avg Revenue beat(4)-0.19%
Min Revenue beat(4)-2.55%
Max Revenue beat(4)3.35%
Revenue beat(8)3
Avg Revenue beat(8)-0.21%
Revenue beat(12)6
Avg Revenue beat(12)0.13%
Revenue beat(16)9
Avg Revenue beat(16)1.36%
PT rev (1m)-7.81%
PT rev (3m)11.68%
EPS NQ rev (1m)0.47%
EPS NQ rev (3m)0.88%
EPS NY rev (1m)-0.17%
EPS NY rev (3m)-0.18%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.24%
Revenue NY rev (1m)0%
Revenue NY rev (3m)2.29%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 22.23 | ||
| Fwd PE | 19.68 | ||
| P/S | 2.44 | ||
| P/FCF | 16 | ||
| P/OCF | 13.72 | ||
| P/B | 6.67 | ||
| P/tB | 10.6 | ||
| EV/EBITDA | 13.8 |
EPS(TTM)12.33
EY4.5%
EPS(NY)13.93
Fwd EY5.08%
FCF(TTM)17.13
FCFY6.25%
OCF(TTM)19.98
OCFY7.29%
SpS112.53
BVpS41.11
TBVpS25.86
PEG (NY)1.72
PEG (5Y)1.63
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 9.95% | ||
| ROE | 27.75% | ||
| ROCE | 19.59% | ||
| ROIC | 15.55% | ||
| ROICexc | 27.81% | ||
| ROICexgc | 42.59% | ||
| OM | 13.7% | ||
| PM (TTM) | 10.14% | ||
| GM | 68.08% | ||
| FCFM | 15.22% |
ROA(3y)8.42%
ROA(5y)5.8%
ROE(3y)23.85%
ROE(5y)16.23%
ROIC(3y)12.08%
ROIC(5y)8.89%
ROICexc(3y)19.57%
ROICexc(5y)14.45%
ROICexgc(3y)28.29%
ROICexgc(5y)20.84%
ROCE(3y)15.23%
ROCE(5y)11.33%
ROICexcg growth 3Y62.44%
ROICexcg growth 5Y-4.41%
ROICexc growth 3Y63.35%
ROICexc growth 5Y-1.3%
OM growth 3Y40.1%
OM growth 5Y1.65%
PM growth 3YN/A
PM growth 5Y7.38%
GM growth 3Y0.54%
GM growth 5Y1.6%
F-Score8
Asset Turnover0.98
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.39 | ||
| Debt/FCF | 1.32 | ||
| Debt/EBITDA | 0.84 | ||
| Cap/Depr | 79.87% | ||
| Cap/Sales | 2.54% | ||
| Interest Coverage | 20.34 | ||
| Cash Conversion | 105.22% | ||
| Profit Quality | 150.11% | ||
| Current Ratio | 1.76 | ||
| Quick Ratio | 1.31 | ||
| Altman-Z | 5.46 |
F-Score8
WACC10.06%
ROIC/WACC1.55
Cap/Depr(3y)81.09%
Cap/Depr(5y)77.42%
Cap/Sales(3y)2.85%
Cap/Sales(5y)3.08%
Profit Quality(3y)89.51%
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)19.48%
EPS 3Y13.92%
EPS 5Y13.66%
EPS Q2Q%32.75%
EPS Next Y12.94%
EPS Next 2Y12.05%
EPS Next 3Y10.47%
EPS Next 5Y6.6%
Revenue 1Y (TTM)N/A
Revenue growth 3YN/A
Revenue growth 5YN/A
Sales Q2Q%8.25%
Revenue Next Year4.13%
Revenue Next 2Y4.25%
Revenue Next 3Y4.57%
Revenue Next 5Y3.96%
EBIT growth 1Y23.97%
EBIT growth 3Y60.62%
EBIT growth 5Y2.65%
EBIT Next Year47.23%
EBIT Next 3Y19.82%
EBIT Next 5Y14.4%
FCF growth 1Y1189.88%
FCF growth 3Y49.08%
FCF growth 5Y9.08%
OCF growth 1Y323.73%
OCF growth 3Y41.09%
OCF growth 5Y6.42%