Q2 Preview: Strong Holiday, China Sales Can Push Coach (COH) Ahead of Views

Coach, Inc. (NYSE: COH) shares are lower Monday ahead of its second-quarter 2012 report, due out Tuesday morning before the market opens.

The Street is looking for earnings of $1.15 per share and revenue of $1.43 billion. The earnings outlook equals growth of 15 percent over $1.00 per share reported in the same period last year.

Shares gained 18.2 percent to $61.04 in the quarter. Coach is up 4.5 percent since the end of the quarter, and finished 2011 about 11.9 percent better.

Last quarter, Coach reported cash of $2.91 and a book value of $6.24 per share. Excluding the cash position from shares, and Coach is trading for 15.3 times next year's earnings estimate. Peer Tiffany & Co. (NYSE: TIF) is trading comparably at about 15.2 times next year's earnings.

Data from Bloomberg shows 19 analysts have a Buy on Coach, 10 maintain a Hold, and none have a Sell rating. The Street's price target average is $72, with a low of $55 and high of $78.

Analyst Comments

• Deutsche Bank is modeling earnings of $1.17 per share and sales of $1.433 billion. The firm sees North American comps up in the high-single-digit range, with China up double digits, and Japan in the low-single-digit range. The firm also commented "We expect wholesale sales to still be up 4% yoy reflecting greater internationalization."
  
  Deutsche said a key data point will be U.S. comps. Tiffany reported softer data in the U.S. with its numbers, and Coach will be able to give further insight about how the U.S. luxury market is shaping up.
  
  
• Brean Murray Carret is looking for earnings of $1.17 and revs of $1.44 billion, saying Coach saw "increased pricing and traction in their full price stores over the Holiday season, as the fashion shifted to more leathers and less logoed items; further the company’s fashion quotient remained extremely solid, with an emphasis on color and somewhat muted ornamentation." China is still strong, while Japan made further recovery from it's tsunami last year. Europe won't an issue for Coach, given limited exposure.
  
  Brean Murray also thinks the mens business is beginning to stick, seeing further expansion in 2012.

Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of their release. You can also check out Coach's past performance at Streetinsider's Coach's Income Statement.

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