business managementTech Investment Research Group
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Analysis of Coach Inc.
Tech Investment Research Group
April 28, 2005
Chris Cotten
Cotten16@yahoo.com
Jordan Butts
Heather Stevens
Ryan Kosarak
Matt March
Tech Investment Research Group
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Table of Contents
Executive Summary 2
Company & Industry Overview 5
Five Forces Model 6
Key Success Factors 9
Competitive Strategy Analysis 12
Accounting Analysis 14
Financial Ratio Analysis 23
Forecasting Methods 33
Valuations 36
Method of Comparables 38
Discounted Cash Flows 39
Residual Income Model 40
Abnormal Earnings Growth 41
Results of Valuations 42
Altman’s Z-Score 43
Final Thoughts on Coach 44
Appendix 45
Resources 58
Tech Investment Research Group
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Coach Executive Summary
Investment Recommendation : BuyDate of Valuation : April 1, 2005Exchange: NYSESymbol: COHEPS ForecastPrice Per Share$55.58FYE2004(A)20052006200752 Week Price Range$35.98 - $59.96EPS$1.42$1.96$2.03$2.20Revenue (2004)1.53BMarket Cap10.45BValuation Ratio ComparisonCoachIndustryShares Outstanding189,600,000Trailing P/E32.9515.42Forward P/E24.4114.94Dividend Yield NAForward PEG1.311.323m Avg Trading Volume2,459,000P/B10.772.54% Institutional Ownership42.67%Valuation EstimatesBVPS5.17Actual Price (April 1, 2005)$55.58ROE42.61%Ratio Based ValuationsROA32.49%Est. 5 year EPS Growth 19.50%P/E Trailing$25.91P/E Forward$33.77Cost of Capital EstimationsM/B$13.15Beta R^2KePEG Forward$48.15Ke Estimate7.00%Ford Epic Valuation$54.05Beta Since Oct 041.2317.32%7.00%3 Year Beta0.09589.02%3.57%Intrinsic Valuations2 Year Beta0.04930.02%3.41%Published Beta1.3Discounted Cash Flows$60.56Residual Income$63.78Kd3.27%Abnormal earnings Growth$63.03WACC BT6.11%Long Run Residual Income$55.76
Tech Investment Research Group
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Executive Summary
Recommendation: BUY
Tech Investment Research Group is announcing their coverage of Coach Inc. After reviewing all aspects of the firm we have decided to give Coach a BUY rating with...