Ralph Lauren Stock: Is RL Outperforming the Consumer Discretionary Sector?
Companies worth $10 billion or more are generally described as 'large-cap stocks,' and RL fits right into that category with its market cap exceeding this threshold, reflecting its substantial size, influence, and dominance in the apparel manufacturing industry. RL's iconic brand embodies classic American style, quality, and aspiration, driving pricing power, customer loyalty, and high gross profit margins. Furthermore, the company's strategic global presence and focus on craftsmanship further enhance its appeal in the luxury goods sector, keeping it at the forefront of the industry.
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Despite its notable strength, RL slipped 5.4% from its 52-week high of $289.33, achieved on Feb. 6. Over the past three months, RL stock rose 16%, outperforming the Consumer Discretionary Select Sector SPDR Fund's (XLY) 5.5% gains during the same time frame.
In the longer term, shares of RL rose 18.5% on a YTD basis and climbed 48.8% over the past 52 weeks, outperforming XLY's YTD 3.9% losses and 18.8% returns over the last year.
To confirm the bullish trend, RL has been trading above its 200-day moving average over the past year, with some fluctuations. The stock is trading above its 50-day moving average since early May.
RL's outperformance is linked to its strong performance in international markets, leading to a company-wide margin expansion. The company's international scale and premium brand positioning have helped diversify revenue and improve operational efficiency, reducing reliance on volatile North American markets. Additionally, RL strategically acquired its Polo flagship in New York's Soho neighborhood, leveraging real estate investment to secure rent savings and strengthen its presence in key city ecosystems.
On May 22, RL shares closed up more than 1% after reporting its Q4 results. Its adjusted EPS of $2.27 beat Wall Street expectations of $2. The company's revenue was $1.7 billion, topping Wall Street forecasts of $1.6 billion.
RL's rival, V.F. Corporation (VFC) shares have lagged behind the stock, with 45.5% losses on a YTD basis and a 20.5% downtick over the past 52 weeks.
Wall Street analysts are moderately bullish on RL's prospects. The stock has a consensus 'Moderate Buy' rating from the 20 analysts covering it, and the mean price target of $307.63 suggests a potential upside of 12.4% from current price levels.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
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