Coach (COH) certainly qualifies as a community favorite. Ranked #10 in the MANIFEST 40 collection of our most widely-followed stocks, a number of us are owners of this high-quality company.
In this week’s update for Value Line, the 3-5 year low price forecast has been adjusted from $85 (11/2/2012 company report) to $70 (2/1/2013). At a stock price of $51.21, this change alone drops the low total return forecast from 15-16% all the way to 10%. Now … 10% is nothing to sneeze at when the overall average low total return forecast is 7.7% — but that five percentage point punch to the midsection is well, a little breathtaking.
Sales Growth Forecast
Profitability Trend and Analysis
Projected Average P/E Ratio
Using a current (trailing 12-month) revenues of approximately $5 billion, a growth rate of 11%, net margin of 20% and a projected average P/E of 18x (payout ratio = 33% and projected yield = 1.9%) generates a long-term return forecast of approximately 18%.
The expectations of the analyst consensus, Morningstar and Standard & Poor’s are considerably more optimistic than Value Line — raising the overall average return forecast to a much higher level than 10%. It’s entirely possible that Value Line is one of the early arrivals and that we could see some weakness in the other forecasts, and we’ll stay vigilant — tuned for any material changes.