Critical Review: Tapestry (TPR) and Capri (CPRI)

Tapestry (NYSE:TPR) and Capri (NYSE:CPRI) are both mid-cap retail/wholesale companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, earnings, institutional ownership, risk, profitability, valuation and analyst recommendations.

Dividends

Tapestry pays an annual dividend of $1.35 per share and has a dividend yield of 3.8%. Capri does not pay a dividend. Tapestry pays out 51.3% of its earnings in the form of a dividend.

Analyst Ratings

This is a breakdown of current recommendations for Tapestry and Capri, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Tapestry 0 7 22 0 2.76
Capri 0 2 3 0 2.60

Tapestry currently has a consensus price target of $50.19, suggesting a potential upside of 41.97%. Capri has a consensus price target of $58.75, suggesting a potential upside of 29.15%. Given Tapestry’s stronger consensus rating and higher possible upside, research analysts clearly believe Tapestry is more favorable than Capri.

Earnings and Valuation

This table compares Tapestry and Capri’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Tapestry $5.88 billion 1.74 $397.50 million $2.63 13.44
Capri $4.72 billion 1.45 $591.90 million $4.52 10.06

Capri has lower revenue, but higher earnings than Tapestry. Capri is trading at a lower price-to-earnings ratio than Tapestry, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

89.6% of Tapestry shares are held by institutional investors. Comparatively, 89.1% of Capri shares are held by institutional investors. 0.7% of Tapestry shares are held by company insiders. Comparatively, 6.0% of Capri shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Risk and Volatility

Tapestry has a beta of 0.76, meaning that its share price is 24% less volatile than the S&P 500. Comparatively, Capri has a beta of 0.6, meaning that its share price is 40% less volatile than the S&P 500.

Profitability

This table compares Tapestry and Capri’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Tapestry 12.18% 23.84% 11.60%
Capri 11.19% 35.44% 16.62%

Summary

Tapestry beats Capri on 10 of the 16 factors compared between the two stocks.

About Tapestry

Tapestry, Inc. provides luxury accessories and lifestyle brands in the United States, Japan, China, Hong Kong, Macau, East Asia, Europe, Canada, Taiwan, South Korea, Malaysia, and Singapore. It operates through three segments: Coach, Kate Spade, and Stuart Weitzman. The company offers handbags, wallets, money pieces, wristlets and cosmetic cases, key rings, and charms, as well as address books, time management accessories, travel accessories, sketchbooks, and portfolios for women; and business cases, computer bags, messenger-style bags, backpacks, totes, wallets, card cases, travel organizers, belts, footwear, watches, sunglasses, novelty accessories, and ready-to-wear for men. It also provides women's footwear; eyewear, such as sunglasses; jewelry comprising bracelets, necklaces, rings, and earrings; fragrances and watches; various women's seasonal lifestyle apparel collections that include outerwear; and ready-to-wear and cold weather accessories, which comprise gloves, scarves, and hats. In addition, the company offers kids ready-to-wear items; housewares and home accessories, including fashion bedding and tableware; and stationery and gifts, as well as weekend accessories and other lifestyle products. Further, the company licenses rights to market and distribute its eyewear, watches, and fragrances under the Coach brand; and fashion bedding, eyewear, footwear, tableware, stationery and gift, tech accessories, and watches under the Kate Spade brand. It sells its products to consumers through a network of Coach, Kate Spade, and Stuart Weitzman operated stores, including the Internet and concession shop-in-shops; and wholesale customers, as well as through independent third party distributors. As of June 30, 2018, the company operated 1,432 stores. The company was formerly known as Coach, Inc. and changed its name to Tapestry, Inc. in October 2017. Tapestry, Inc. was founded in 1941 and is headquartered in New York, New York.

About Capri

Capri Holdings Limited design, markets, distributes, and retails branded women's and men's apparel and accessories. It operates in four segments: MK Retail, MK Wholesale, MK Licensing, and Jimmy Choo. The MK Retail segment sells women's apparel; handbags and small leather goods; men's apparel; footwear; and licensed products comprising watches, jewelry, fragrances, and beauty and eyewear. It operates collection stores and lifestyle stores, including concessions and outlets. As of March 31, 2018, this segment operated 379 Michael Kors retail stores, including concessions in the United States and Canada, and Latin America; and 450 international retail stores, including concessions in Europe and Asia, as well as e-commerce sites in North America, Canada, Europe, China, Japan, and South Korea. The MK Wholesale segment sells handbags and small leather goods; footwear; and women's and men's apparel to department stores and specialty shops in the Americas, Europe, and Asia. The MK Licensing segment licenses its trademarks to third parties to operate retail stores and/or sell the its products in Brazil, the Middle East, South Africa, Eastern Europe, Asia, and Australia. The Jimmy Choo segment sells luxury footwear, handbags, and small leather goods through directly operated Jimmy Choo stores in North America; Europe, the Middle East, and Africa; and Asia, as well as through Jimmy Choo e-commerce sites. It is also involved in the wholesale distribution activities worldwide; and licensing agreements related to the manufacture and sale of fragrance, sunglasses, and eyewear. As of March 31, 2018, this segment operated 629 wholesale doors. The company sells its products under the names of MICHAEL KORS, MICHAEL MICHAEL KORS, JIMMY CHOO, and other trademarks and logos. The company was formerly known as Michael Kors Holdings Limited and changed its name to Capri Holdings Limited in December 2018. Capri Holdings Limited was founded in 1981 and is based in London, the United Kingdom.

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