Value
7.8/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 7.4 |
| P/S | 8.2 |
| EV/EBITDA | 3.9 |
| Fwd P/E | 8.4 |
| PEG | 10.0 |
| Analyst target | 7.5 |
- ▸Forward P/E: 13.8x
- ▸PEG: 0.26
- ▸Attractively valued
TPR · Why this verdict
Why Tapestry (TPR) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score5.9/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Tapestry is a high-quality luxury goods company with a Piotroski F-Score of 8 out of 9, 231% free cash flow conversion, and a perfect four-quarter earnings beat streak averaging 14.9% positive surprises, supported by a strong competitive moat in branded handbags. The primary near-term constraint is that the stock has reached its analyst resistance target, with the Coach brand accounting for approximately 80% of revenues representing a meaningful concentration risk.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Tapestry converts 231% of net income to free cash flow, holds a return on equity of 61%, and scores a 7.5 out of 10 on competitive moat — placing it among the highest-quality consumer cyclical companies in terms of earnings reliability and cash generation. Quality breakdown | Free cash flow conversion remains above 150% of net income and return on equity stays above 40% over the next 4 quarters. | →Stable |
| CounterHigh free cash flow relative to net income in luxury goods can reflect favorable licensing and royalty timing effects; if consumer spending on discretionary luxury contracts, both the conversion ratio and the return on equity could compress quickly. | ||
Tapestry beat earnings estimates in all four of the last four quarters with an average positive surprise of 14.9%, including a notable 27.8% beat in the most recent quarter, demonstrating that management consistently sets achievable guidance targets. Earnings | Earnings beats continue in at least 3 of the next 4 quarters with an average positive surprise above 8%. | ↓Deteriorating |
| CounterA perfect beat streak attracts momentum investors who bid up the price, making the subsequent bar harder to clear; Tapestry's average surprise has ranged widely from 2.1% to 27.8%, suggesting inconsistency in the beat magnitude. | ||
Approximately 79.9% of Tapestry's revenues are derived from the Coach brand, meaning diversification to Kate Spade and Stuart Weitzman has not yet materially reduced single-brand dependence; a Coach brand misstep or market share loss would have an outsized earnings impact. Bear case | Coach revenue share declines to below 75% within 12 months as Kate Spade and Stuart Weitzman grow their combined contribution. | ↑Improving |
| CounterCoach brand concentration can be viewed as a strength — it is a globally recognized affordable-luxury brand with pricing power — and brand focus often produces better returns than excessive diversification in the luxury goods sector. | ||
The stock has a momentum score of 8.0 out of 10, is above all moving averages in a golden cross pattern, and RSI is at 64, yet the current price has already reached its near-term resistance target, leaving limited additional technical headroom without analyst target upgrades. Momentum breakdown | Analyst price targets are revised above $170, more than 12% above the current $150.99, following continued earnings beats over the next 2 quarters. | ↓Deteriorating |
| CounterA stock at its resistance target with an RSI of 64 is approaching overbought territory; without a catalyst for analyst upgrades, technical momentum may stall and the elevated put-to-call ratio of 1.31 signals hedging activity that limits upside. | ||
Tapestry converts 231% of net income to free cash flow, holds a return on equity of 61%, and scores a 7.5 out of 10 on competitive moat — placing it among the highest-quality consumer cyclical companies in terms of earnings reliability and cash generation.
→StableQuality breakdown
- Expectation
- Free cash flow conversion remains above 150% of net income and return on equity stays above 40% over the next 4 quarters.
CounterHigh free cash flow relative to net income in luxury goods can reflect favorable licensing and royalty timing effects; if consumer spending on discretionary luxury contracts, both the conversion ratio and the return on equity could compress quickly.
Tapestry beat earnings estimates in all four of the last four quarters with an average positive surprise of 14.9%, including a notable 27.8% beat in the most recent quarter, demonstrating that management consistently sets achievable guidance targets.
↓DeterioratingEarnings
- Expectation
- Earnings beats continue in at least 3 of the next 4 quarters with an average positive surprise above 8%.
CounterA perfect beat streak attracts momentum investors who bid up the price, making the subsequent bar harder to clear; Tapestry's average surprise has ranged widely from 2.1% to 27.8%, suggesting inconsistency in the beat magnitude.
Approximately 79.9% of Tapestry's revenues are derived from the Coach brand, meaning diversification to Kate Spade and Stuart Weitzman has not yet materially reduced single-brand dependence; a Coach brand misstep or market share loss would have an outsized earnings impact.
↑ImprovingBear case
- Expectation
- Coach revenue share declines to below 75% within 12 months as Kate Spade and Stuart Weitzman grow their combined contribution.
CounterCoach brand concentration can be viewed as a strength — it is a globally recognized affordable-luxury brand with pricing power — and brand focus often produces better returns than excessive diversification in the luxury goods sector.
The stock has a momentum score of 8.0 out of 10, is above all moving averages in a golden cross pattern, and RSI is at 64, yet the current price has already reached its near-term resistance target, leaving limited additional technical headroom without analyst target upgrades.
↓DeterioratingMomentum breakdown
- Expectation
- Analyst price targets are revised above $170, more than 12% above the current $150.99, following continued earnings beats over the next 2 quarters.
CounterA stock at its resistance target with an RSI of 64 is approaching overbought territory; without a catalyst for analyst upgrades, technical momentum may stall and the elevated put-to-call ratio of 1.31 signals hedging activity that limits upside.
Per-dimension breakdown
Quality
8.2/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 10.0 |
| Gross margin | 10.0 |
| Op margin | 7.9 |
| Net margin | 9.5 |
| Current ratio | 6.3 |
| FCF quality | 6.6 |
| Moat | 6.9 |
| Rule of 40 | 5.5 |
| Piotroski F | 8.9 |
- ▸Excellent ROE: 197%
- ▸Strong margins: 19%
- ▸Strong Piotroski F-Score: 8/9
- ▸High-quality business
Growth
4.7/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 4.7 |
Momentum
1.3/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.5 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 2.2 |
| Volume | 0.0 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA but MA still rising (+3.4%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
7.9/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 7.5 |
| Analyst rating | 7.5 |
| Price target | 8.9 |
- ▸LLM news sentiment: +0.50 (n=1)
- ▸Analyst upside: 36%
Insider
5.2/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.4 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
4.3/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 2.0 |
| quality rank | 8.2 |
| growth rank | 5.0 |
- ▸Best-in-class margins
Technical
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 7.1 |
| support resistance | 9.3 |
| 52w position | 5.0 |
Risk (lower is worse)
4.5/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.5 |
| days to cover | 4.7 |
| volatility | 5.5 |
| put call | 5.7 |
| implied vol | 6.3 |
| max pain risk | 3.0 |
| beta | 5.1 |
| debt equity | 0.0 |
- ▸Above max pain $110
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 6.8 |
| news activity | 5.0 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position. | News modifier +2 (SELL_IF_HOLDING → HOLD_IF_HOLDING).
Engine technical detail
verdict_path:
L4:PATH_F_SELL|L3:NEWS_MOD=+2Passed (6)
- ASYMMETRY:3.9>=1.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:64d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- MOMENTUM:1.3<4.5
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
3.93
Upside
+22.1%
Downside
5.6%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeTemporary headwind — High quality (8.2) with weak momentum (1.3)
SuitabilityAggressive — Beta 1.46>1.3
Investment implication
The F-path SELL output reflects an overall score of 4.4 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Quality at 8.2) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:1.3<4.5) reinforce the read. Current asymmetry R:R is 3.93 — supplementary context, not the trigger for this path.
The strongest dimensions are Quality at 8.2, Sentiment at 7.9, and Value at 7.8; the weakest are Momentum at 1.3, Peer rank at 4.3, and Risk (lower is worse) at 4.5. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of 3.93 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Exceptional Free Cash Conversion And Quality
Trip ifFree cash flow drops below 100% of net income for 2 consecutive quarters, or return on equity falls below 30%.
- P2Perfect Earnings Beat Streak
Trip ifEPS surprise falls below 0% in at least 3 of the next 4 quarters, signaling that estimate inflation has caught up to management guidance.
- P3Coach Brand Revenue Concentration
Trip ifCoach brand revenue declines by more than 10% year over year for 2 consecutive quarters, indicating brand erosion rather than mix shift.
- P4Strong Momentum With Target Exhaustion
Trip ifPrice falls below $123 entry support, more than 18% below the current $150.99, signaling a breakdown through the identified support level.