Ralph Lauren Stock Rises 64.1% in a Year: Time to Buy, Sell or Hold?

Core Viewpoint - Ralph Lauren Corporation (RL) has demonstrated significant stock performance, with a 64.1% increase over the past year, outperforming the Consumer Discretionary sector and the S&P 500 index [1][2] Financial Performance - The company is currently priced at $181.44, which is 5.5% below its 52-week high of $192.03 and 67.1% above its 52-week low [1] - Management forecasts mid-to-high-single-digit compounded annual revenue growth in constant currency from fiscal 2022 to 2025, with operating profit growth expected to outpace revenue growth [3] - Operating margin is projected to reach at least 15% by fiscal 2025, supported by modest gross margin improvements and controlled expenses [3] - The company plans to return $2 billion to shareholders through dividends and share repurchases by fiscal 2025 [3] Strategic Initiatives - Ralph Lauren's growth is driven by its 'Next Great Chapter: Accelerate Plan', focusing on elevating its lifestyle brand and expanding its presence in key cities [2] - The company is enhancing its global lifestyle brands by offering premium products that align with evolving consumer preferences [2] - Significant investments in marketing, digital growth, and ecosystem expansion in major cities are ongoing, with direct-to-consumer channels performing well [4] Market Challenges - The company faces macroeconomic challenges, including inflation and supply-chain issues, which may impact gross and operating margins [6] - The North America wholesale business reported a 13% decline in revenues in the first quarter of fiscal 2025, attributed to timing shifts and lower product sales [7] - Management anticipates that wholesale declines will moderate through the remainder of fiscal 2025 [8] Valuation Metrics - Ralph Lauren stock is trading at a forward price/earnings ratio of 15.31, higher than the industry average of 12.38 and its median of 14.48 [9] Earnings Estimates - The Zacks Consensus Estimate for earnings per share (EPS) for fiscal 2025 has been revised up by 1.5% to $11.24, indicating a year-over-year growth of 9% [5] - For fiscal 2026, the EPS estimate has been revised up by 0.2% to $12.56, implying an 11.8% growth year-over-year [5]