Ralph Lauren: Not A Good Fit At Record Valuation
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Alan Galecki565 FollowersFollow5ShareSavePlay(9min)CommentsSummaryRalph Lauren is rated a strong sell, as its valuation has outpaced fundamentals despite recent business momentum and execution.RL's record-high margins and near-record revenues are offset by its cyclical nature and a lofty 25–30x FCF multiple, making downside risk significant.The core North American market has nearly halved in sales, with Europe and Asia now driving growth, increasing RL’s exposure to shifting consumer preferences.With a 1% dividend and flawless execution already priced in, the risk/reward setup is unattractive; a double-digit correction is anticipated. stockwerk/iStock Editorial via Getty Images Intro Ralph Lauren (RL), the iconic and timeless American apparel and accessories company, is known and respected for its lifestyle products all over the world. RL offers apparel for men, women, and children; footwear and accessories like eyewear, fineThis article was written byAlan Galecki565 FollowersFollowAlways on the hunt for undervalued, promising stocks with a focus on risk and reward. Limited risks and decent to high upside by knowing what one's owning. I strongly believe that the best investment ideas are often the simplest. If contrarian, the better.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.