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Ralph Lauren & Eaton: 2 Companies on 2 Different Paths

These are our articles posted on Seeking Alpha. Click "READ MORE" if you would like to read the rest of the articles.

Little Upside Left In Ralph Lauren In 2016

Summary

  • RL’s global reorganization plan is yet to deliver solid results.
  • RL’s performance in terms of profitability has been woeful.
  • RL’s fair value is close to $103.

Ralph Lauren (NYSE:RL) had a terrible third quarter as it reported a 4% decline in sales, way below the company's guidance of 0-2% growth. For the nine months ended, RL's net revenue failed to grow in all of its three geographic locations: Americas, Europe and Asia. As RL derives at least 65% of its revenues from North America, the steep 4% net revenue slump in that region in Q3 2016 hurt the company's top-line considerably.

Polo may be fun but holding Ralph Lauren's stock right now might not be.

I was expecting to see better results because now it has been almost a year since RL announced its global reorganization plan, aimed at re-elevating the company's brand and improving cost structure, but unfortunately the results have been disappointing. Although RL demonstrated good expense control this quarter, managing to deliver better-than expected operating margin, the company's profitability is still far from impressive. Return on equity has been falling since 2013 and if we look closely, the combination of factors leading to this decline is particularly disconcerting... READ MORE



Should You Hold Onto Eaton After The Rally?

Summary

  • Eaton's share price gained a lot of momentum, but it is not a sell.
  • The company's business fundamentals are strong and its stock is undervalued.
  • Eaton's stock is likely to surge more on healthy balance sheet, low exposure towards volatile markets and sustainable growth in earnings.

Eaton Corp. (NYSE:ETN) has been stunning investors with a growth in its share price over the last two months. Several investors and traders were worried about the negative impact from several factors: the strengthening dollar, gloomy economic environment, slowing Chinese growth and falling prices on Eaton's overall performance.

These concerns have slashed ETN's share price from a 52-week high of $73 a share in the mid of last year to around $47 in the time frame of only 6 months. After dipping to $47 a share in the first month of this year, the company's stock price has soared over 30% in the last two months. The company's stock price has been surging on several positive reports that have helped in repelling negative sentiments... READ MORE

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