Coach Company Business Plan

Topics: Balance sheet, Cash flow, Asset Pages: 9 (2853 words) Published: June 19, 2013
Investment Summary:
In this report regarding to the investment in the stock of the company will focus on the overriding factors in the overvaluation of the shares of this company. The DCF analysis will shows that the fair price will be $41, but the market will shows the price of $58. This shows that the market will offer more for the securities. This argument is the basis for our argument of selling the stocks of the company. The share price of the company will decrease from $58.73 to $58.58 in period December 2012 to May 2013 (yahoo Finance, 2013). This decrease in the share prices is due to the internal deficiencies of the organization. The EPS of the company shows the continuous increasing trend in the last decade. This will be the positive point for investors to purchase the securities of this company. While, the P/E ratio of the company in the last four years shows the miscellaneous trend and is decreased in 2013 with respect to 2012. The free cash flow of the company shows the sustainable constant growth of 4%. This rate is constant due to the increase in the competition in the market along with the changes in the trends of the people. Coach Company is performing in the exceptionally high competitive market with Competitors like, Gucci, Prada and etc. These competitors are experiencing a high growth in the market and enjoy a large market share due to their competitive edge in the market. The company performance in last few years shows a enormous potential of the company till 2012, but with the start of 2013. The decline in the P/E ratio of the company also shows that the company performance will not be better in the next few years, and hence it is better to sell the stock of this company. Valuation:

This report regarding to the Coach Company dealing in the leather products and hand bags is entirely focused on the company’s financial statements. The future predictions according to the future cash flows of the company are based upon the historical information of the company records. There are different models that are used by organizations like, dividend discount model, discounted residual income, discounted cash flow approach. Along with these different models, discounting cash flow model approach will be used in the valuation of the data of the company and for adoption of predictions into the analysis of this company. This model is based upon the calculation of WACC. We use the beta 1.61 for the calculation of WACC, which is 13%. Business Description:

The company starts its life in Manhattan in 1941 as a family run workshop. This company is performing in the leather industry and mostly dealing in the ladies handbags along with the luggage and wallet briefcase and etc. The company always maintains a high level of standards regarding material usage and the products and is the main reason of the expansion of the market share of the company. Coach Company also takes the help of licensing in its market expansion and sells office furniture, footwear and watches with the help of its licensed partners. Coach always focuses on the continual improvement and anticipation of the consumer demands. This continual department along with the increased focus on the consumer demands makes its image in the U.S market. The company uses the direct marketing approach to reach their customers. According to report on June 30, 2012, the coach company is operated in the 354 retail stores along with 169 factory leased stores in North America (BloomBerg, 2013). Keys Success Factors of the company:

The success of the company is dependent upon some factors. These factors are called key success factors of the organization. Like any other organization, there are some key success factors of this organization, and these are: A Brand image:

The Coach brand is one of the famous brands of the U.S market. Coach always committed to providing the best quality output in response of the consumer demands. This high perception of consumer...

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Y Charts. (2013, June 03). Coach Historical EPS Diluted TTM Data. Retrieved from www.ycharts.com: https://ycharts.com/companies/COH/eps_ttm
yahoo Finance. (2013, May 03). Coach, Inc. (COH) -NYSE. Retrieved from finance.yahoo.com: http://finance.yahoo.com/q/hp?s=COH&a=11&b=31&c=212&d=05&e=4&f=2013&g=m
Yahoo Finance. (2013, June 03). Coach, Inc. (COH) -NYSE. Retrieved from finance.yahoo.com: http://finance.yahoo.com/q?s=COH
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