Value
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 2.8 |
| P/S | 7.8 |
| EV/EBITDA | 2.2 |
| Fwd P/E | 6.8 |
| PEG | 10.0 |
| Analyst target | 5.0 |
- ▸Forward P/E: 18.6x
- ▸PEG: 0.29
TPR · Why this verdict
Why Tapestry (TPR) is rated BUY WAIT
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictBUY WAIT
Overall score6.3/10
ConfidenceMEDIUM
MacroNEUTRAL
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%. | →Stable |
| 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. | →Stable |
| 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. | →Stable |
| 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.
→StableEarnings
- 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.
→StableBear 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.
→StableMomentum 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.
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.
Per-dimension breakdown
Quality
8.3/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 10.0 |
| Gross margin | 10.0 |
| Op margin | 9.0 |
| Net margin | 4.2 |
| Current ratio | 6.5 |
| FCF quality | 10.0 |
| Moat | 7.5 |
| Rule of 40 | 7.1 |
| Piotroski F | 8.9 |
- ▸Excellent ROE: 61%
- ▸Excellent cash conversion: 231% FCF/NI
- ▸Wide economic moat
- ▸Compounder quality: strong returns + growth
Growth
8.9/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 7.8 |
| EPS growth | 10.0 |
- ▸Strong growth: 21% YoY
Momentum
3.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 0.0 |
| OBV | 4.8 |
| MA position | 6.0 |
| Volume | 2.5 |
- ▸Above 200-day MA
Sentiment
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.5 |
| Price target | 7.2 |
| erm sentiment | 5.7 |
Insider
3.9/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 5.1 |
- ▸Modest insider selling — $6,429,507 (0.022% of mkt cap)
Peer rank
4.6/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 0.0 |
| quality rank | 7.7 |
| growth rank | 5.7 |
- ▸Superior ROE vs peers
Technical
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 6.1 |
| support resistance | 6.1 |
| 52w position | 7.9 |
Risk (lower is worse)
3.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 4.9 |
| days to cover | 3.4 |
| volatility | 2.7 |
| put call | 4.3 |
| implied vol | 4.9 |
| beta | 5.2 |
| debt equity | 0.0 |
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 9.9 |
| dividend safety | 4.8 |
- ▸Perfect beat streak: 4Q
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Growth is cheap relative to earnings, but the technical setup has not yet produced a breakout above resistance (PEG 0.29, quality 8.3/10, growth 8.9/10).
Engine technical detail
verdict_path:
L4:PATH_C2_GARP_WAIT|ENTRY_STICKY:WITHIN_BANDPassed (5)
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:41d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:3.8<4.5
- ASYMMETRY:0.5<1.5@spot
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
0.52
Upside
+4.1%
Downside
7.8%
Sizing output
STARTER
SetupRange Bound — RSI 48 mid-range, Bollinger mid-band
EdgeTemporary headwind — High quality (8.3) with weak momentum (3.8)
SuitabilityAggressive — Beta 1.45>1.3
Investment implication
The C-path quality+growth combination triggered the STRONG_BUY_WAIT verdict: quality 8.3 and growth 8.9 both clear their thresholds, with asymmetric R:R of 0.52 supporting the read.
The strongest dimensions are Growth at 8.9, Quality at 8.3, and Sentiment at 6.9; the weakest are Risk (lower is worse) at 3.6, Momentum at 3.8, and Insider at 3.9. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of 0.52 and an engine sizing output of STARTER.
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.