Tuesday, July 17, 2012

Coach Inc (COH) 2012 Review

Coach Inc (COH) designs, produces and markets high quality hand bags, business cases, luggage, leather outer wear and men’s and women’s accessories.

The company has grown profits 30%+ annually for the last ten years earnings a 40%+ return on equity. Its dividend has grown from $.08 in 2009 to an expected $1.12 in 2012. COH was not immune to the declines in consumer spending in 2007-2009; however, as the economy has improved, it has benefited from:

(1) improving comparable store sales and rising margins due to:

(a) product innovation,

(b) a market savvy pricing strategy,

(c) effective cost control program.

(2) continuing to expand geographically, especially in emerging markets


(1) it is in a highly competitive industry,

(2) its customer base is sensitive to economic conditions,

(3) fashion obsolescence is a major risk.

COH is rated A by Value Line, has almost no debt (1%) and its stock yields 1.7%.

Statistical Summary

Stock Yield Dividend Growth Rate Payout Ratio # Increases Since 2009
COH 1.7% 30% 33% 3
IND 1.0 * 14 NA

Debt/Equity ROE EPS Down Since 2002 Net Margin Value Line Rating
COH 1% 55% 1 22% A
IND 29 14 NA 4 NA

*many companies in COH’s industry do not pay a dividend


Note: COH made great progress off its March 2009 low, quickly surpassing the downtrend off its September 2007 high (straight red line) and the December 2008 trading high (green line). Long term the stock is in an uptrend (blue lines). The wiggly red line is the 50 day moving average. COH has just been Added to our Aggressive Growth Buy List, although as of today, the Aggressive Growth Portfolio has not Bought shares. The lower boundary of its Sell Half Range is $105.


Steve Cook received his education in investments from Harvard, where he earned an MBA, New York University, where he did post graduate work in economics and financial analysis and the CFA Institute, where he earned the Chartered Financial Analysts designation in 1973. His 40 years of investment experience includes institutional portfolio management at Scudder, Stevens and Clark and Bear Stearns. Steve's goal at Strategic Stock Investments is to help other investors build wealth and benefit from the investing lessons he learned the hard way.