Michael Kors Holdings Limited (KORS) versus Ross Stores (ROST) Financial Survey

Michael Kors Holdings Limited (NYSE: KORS) and Ross Stores (NASDAQ:ROST) are both mid-cap consumer discretionary companies, but which is the superior investment? We will contrast the two businesses based on the strength of their profitability, risk, institutional ownership, valuation, dividends, earnings and analyst recommendations.

Profitability

This table compares Michael Kors Holdings Limited and Ross Stores’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Michael Kors Holdings Limited 11.91% 40.26% 26.12%
Ross Stores 8.87% 42.95% 21.77%

Earnings & Valuation

This table compares Michael Kors Holdings Limited and Ross Stores’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Michael Kors Holdings Limited $4.46 billion 1.53 $1.07 billion $3.22 13.95
Ross Stores $13.33 billion 1.74 $2.19 billion $3.03 20.04

Ross Stores has higher revenue and earnings than Michael Kors Holdings Limited. Michael Kors Holdings Limited is trading at a lower price-to-earnings ratio than Ross Stores, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Michael Kors Holdings Limited and Ross Stores, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Michael Kors Holdings Limited 3 19 3 0 2.00
Ross Stores 0 7 13 0 2.65

Michael Kors Holdings Limited presently has a consensus price target of $41.77, indicating a potential downside of 7.01%. Ross Stores has a consensus price target of $70.41, indicating a potential upside of 15.98%. Given Ross Stores’ stronger consensus rating and higher probable upside, analysts plainly believe Ross Stores is more favorable than Michael Kors Holdings Limited.

Dividends

Ross Stores pays an annual dividend of $0.64 per share and has a dividend yield of 1.1%. Michael Kors Holdings Limited does not pay a dividend. Ross Stores pays out 21.1% of its earnings in the form of a dividend. Michael Kors Holdings Limited has increased its dividend for 10 consecutive years.

Insider & Institutional Ownership

83.4% of Michael Kors Holdings Limited shares are held by institutional investors. Comparatively, 89.6% of Ross Stores shares are held by institutional investors. 6.0% of Michael Kors Holdings Limited shares are held by insiders. Comparatively, 2.3% of Ross Stores shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

Ross Stores beats Michael Kors Holdings Limited on 10 of the 16 factors compared between the two stocks.

About Michael Kors Holdings Limited

Michael Kors Holdings Limited is a designer, marketer, distributor and retailer of branded women’s apparel and accessories and men’s apparel bearing the Michael Kors tradename and related trademarks MICHAEL KORS, MICHAEL MICHAEL KORS, and various other related trademarks and logos. The Company operates through three segments: retail, wholesale and licensing. The Retail operations consist of collection stores and lifestyle stores, including concessions and outlet stores, located primarily in the Americas (the United States, Canada and Latin America), Europe and Asia, as well as e-commerce. Wholesale revenues are principally derived from major department and specialty stores located throughout the Americas, Europe and Asia. The Company licenses its trademarks on products, such as fragrances, beauty, eyewear, leather goods, jewelry, watches, coats, men’s suits, swimwear, furs and ties, as well as through geographic licenses.

About Ross Stores

Ross Stores, Inc. and its subsidiaries operate two brands of off-price retail apparel and home fashion stores-Ross Dress for Less (Ross) and dd’s DISCOUNTS. The Company is the off-price apparel and home fashion chain in the United States, with 1,340 locations in 36 states, the District of Columbia and Guam, as of January 28, 2017. The Company offers in-season, name brand and designer apparel, accessories, footwear, and home fashions for the entire family at savings of 20% to 60% off department and specialty store regular prices every day. The Company also operated 193 dd’s DISCOUNTS stores in 15 states as of January 28, 2017. As of January 28, 2017, the Company operated a total of 1,533 stores consisted of 1,340 Ross stores and 193 dd’s DISCOUNTS stores. As of January 28, 2017, the Company owned and operated six distribution processing facilities-three in California, one in Pennsylvania, and two in South Carolina.

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