RALPH LAUREN CORP (RL) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:RL - US7512121010 - Common Stock
367.37 USD
+3.57 (+0.98%)
367.37 USD
0 (0%)
Taking everything into account, RL scores 7 out of 10 in our fundamental rating. RL was compared to 45 industry peers in the Textiles, Apparel & Luxury Goods industry. RL has outstanding health and profitabily ratings, belonging to the best of the industry. This is a solid base for any company. RL is not valued too expensively and it also shows a decent growth rate. With these ratings, RL could be worth investigating further for quality investing!.
1. Profitability
1.1 Basic Checks
- RL had positive earnings in the past year.
- In the past year RL had a positive cash flow from operations.
- RL had positive earnings in 4 of the past 5 years.
- Each year in the past 5 years RL had a positive operating cash flow.
1.2 Ratios
- The Return On Assets of RL (11.63%) is better than 91.11% of its industry peers.
- The Return On Equity of RL (33.08%) is better than 88.89% of its industry peers.
- Looking at the Return On Invested Capital, with a value of 16.88%, RL belongs to the top of the industry, outperforming 86.67% of the companies in the same industry.
- Measured over the past 3 years, the Average Return On Invested Capital for RL is above the industry average of 11.59%.
- The 3 year average ROIC (13.65%) for RL is below the current ROIC(16.88%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 11.63% | ||
| ROE | 33.08% | ||
| ROIC | 16.88% |
ROA(3y)9.34%
ROA(5y)6.85%
ROE(3y)25.53%
ROE(5y)19.12%
ROIC(3y)13.65%
ROIC(5y)11.13%
1.3 Margins
- RL's Profit Margin of 11.28% is amongst the best of the industry. RL outperforms 91.11% of its industry peers.
- In the last couple of years the Profit Margin of RL has grown nicely.
- RL has a Operating Margin of 15.22%. This is amongst the best in the industry. RL outperforms 86.67% of its industry peers.
- RL's Operating Margin has improved in the last couple of years.
- With an excellent Gross Margin value of 69.22%, RL belongs to the best of the industry, outperforming 95.56% of the companies in the same industry.
- In the last couple of years the Gross Margin of RL has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 15.22% | ||
| PM (TTM) | 11.28% | ||
| GM | 69.22% |
OM growth 3Y1.83%
OM growth 5Y16.31%
PM growth 3Y2.83%
PM growth 5Y10.96%
GM growth 3Y0.92%
GM growth 5Y2.93%
2. Health
2.1 Basic Checks
- The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so RL is still creating some value.
- Compared to 1 year ago, RL has less shares outstanding
- RL has less shares outstanding than it did 5 years ago.
- The debt/assets ratio for RL has been reduced compared to a year ago.
2.2 Solvency
- RL has an Altman-Z score of 6.14. This indicates that RL is financially healthy and has little risk of bankruptcy at the moment.
- The Altman-Z score of RL (6.14) is better than 91.11% of its industry peers.
- The Debt to FCF ratio of RL is 2.22, which is a good value as it means it would take RL, 2.22 years of fcf income to pay off all of its debts.
- With a decent Debt to FCF ratio value of 2.22, RL is doing good in the industry, outperforming 77.78% of the companies in the same industry.
- A Debt/Equity ratio of 0.57 indicates that RL is somewhat dependend on debt financing.
- RL has a worse Debt to Equity ratio (0.57) than 64.44% of its industry peers.
- Although RL does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.57 | ||
| Debt/FCF | 2.22 | ||
| Altman-Z | 6.14 |
ROIC/WACC1.49
WACC11.32%
2.3 Liquidity
- RL has a Current Ratio of 2.04. This indicates that RL is financially healthy and has no problem in meeting its short term obligations.
- RL's Current ratio of 2.04 is in line compared to the rest of the industry. RL outperforms 55.56% of its industry peers.
- RL has a Quick Ratio of 1.35. 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 better Quick ratio (1.35) than 68.89% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.04 | ||
| Quick Ratio | 1.35 |
3. Growth
3.1 Past
- The Earnings Per Share has grown by an impressive 31.74% over the past year.
- Measured over the past years, RL shows a quite strong growth in Earnings Per Share. The EPS has been growing by 13.66% on average per year.
- RL shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 12.32%.
- RL shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 2.82% yearly.
EPS 1Y (TTM)31.74%
EPS 3Y13.92%
EPS 5Y13.66%
EPS Q2Q%49.21%
Revenue 1Y (TTM)12.32%
Revenue growth 3Y4.41%
Revenue growth 5Y2.82%
Sales Q2Q%16.49%
3.2 Future
- Based on estimates for the next years, RL will show a quite strong growth in Earnings Per Share. The EPS will grow by 10.21% on average per year.
- The Revenue is expected to grow by 4.92% on average over the next years.
EPS Next Y29.26%
EPS Next 2Y19.15%
EPS Next 3Y16.58%
EPS Next 5Y10.21%
Revenue Next Year10.54%
Revenue Next 2Y7.77%
Revenue Next 3Y6.87%
Revenue Next 5Y4.92%
3.3 Evolution
- The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
- When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
- With a Price/Earnings ratio of 25.08, RL can be considered very expensive at the moment.
- Compared to the rest of the industry, the Price/Earnings ratio of RL is on the same level as its industry peers.
- When comparing the Price/Earnings ratio of RL to the average of the S&P500 Index (27.21), we can say RL is valued inline with the index average.
- The Price/Forward Earnings ratio is 20.99, which indicates a rather expensive current valuation of RL.
- The rest of the industry has a similar Price/Forward Earnings ratio as RL.
- RL is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 24.26, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.08 | ||
| Fwd PE | 20.99 |
4.2 Price Multiples
- RL's Enterprise Value to EBITDA is on the same level as the industry average.
- The rest of the industry has a similar Price/Free Cash Flow ratio as RL.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 33.36 | ||
| EV/EBITDA | 15.79 |
4.3 Compensation for Growth
- The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
- RL has an outstanding profitability rating, which may justify a higher PE ratio.
- A more expensive valuation may be justified as RL's earnings are expected to grow with 16.58% in the coming years.
PEG (NY)0.86
PEG (5Y)1.84
EPS Next 2Y19.15%
EPS Next 3Y16.58%
5. Dividend
5.1 Amount
- With a yearly dividend of 0.99%, RL is not a good candidate for dividend investing.
- Compared to an average industry Dividend Yield of 1.43, RL has a dividend in line with its industry peers.
- With a Dividend Yield of 0.99, RL pays less dividend than the S&P500 average, which is at 1.82.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.99% |
5.2 History
- The dividend of RL has a limited annual growth rate of 3.54%.
- RL has been paying a dividend for at least 10 years, so it has a reliable track record.
- RL has not decreased its dividend in the last 3 years.
Dividend Growth(5Y)3.54%
Div Incr Years4
Div Non Decr Years4
5.3 Sustainability
- RL pays out 24.37% of its income as dividend. This is a sustainable payout ratio.
- The dividend of RL is growing, but earnings are growing more, so the dividend growth is sustainable.
DP24.37%
EPS Next 2Y19.15%
EPS Next 3Y16.58%
RALPH LAUREN CORP / RL FAQ
What is the ChartMill fundamental rating of RALPH LAUREN CORP (RL) stock?
ChartMill assigns a fundamental rating of 7 / 10 to RL.
What is the valuation status of RALPH LAUREN CORP (RL) stock?
ChartMill assigns a valuation rating of 4 / 10 to RALPH LAUREN CORP (RL). This can be considered as Fairly Valued.
How profitable is RALPH LAUREN CORP (RL) stock?
RALPH LAUREN CORP (RL) has a profitability rating of 9 / 10.
What are the PE and PB ratios of RALPH LAUREN CORP (RL) stock?
The Price/Earnings (PE) ratio for RALPH LAUREN CORP (RL) is 25.08 and the Price/Book (PB) ratio is 8.63.
What is the financial health of RALPH LAUREN CORP (RL) stock?
The financial health rating of RALPH LAUREN CORP (RL) is 7 / 10.