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Analyzing Ralph Lauren’s Stock Performance and Dividend Payout

Sonya Bells

Fashion Forward: Ralph Lauren Ends Fiscal 2016 in Style

(Continued from Prior Part)

Stock market performance

Ralph Lauren’s stock price hasn’t shown any signs of improvement during the current year. The company’s stock price has fallen more than 23% YTD (year-to-date) as of May 13, 2016. It lost 39% of its value in 2015. In comparison, Coach (COH), PVH (PVH), and Michael Kors (KORS) have gained 13%, 15%, and 8%, respectively. Under Armor (UA) and Hanesbrands (HBI) have lost 8.5% and 8% YTD. The S&P 500 Apparel and Accessories index is a seven company index based on Ralph Lauren, Hanesbrands, VF Corporation (VFC), Coach, PVH, Michael Kors, and Under Armor. It’s down 1.2% YTD.

Dividends and buybacks

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Despite a decline in earnings, Ralph Lauren continues to hold $1.3 billion in cash and short-term investments on its balance sheet. The company has a negative net debt (total debt—cash and equivalents) of $372 million. Ralph Lauren’s strong balance sheet position and cash flow allowed it to pay consistent dividends and repurchase shares in order to boost shareholders’ value.

The company repurchased 1.2 million shares during fiscal 4Q16 for $100 million. For fiscal 2016, the total buyback stood at 4.2 million shares for a total cost of $480 million.

The company returned $170 million to shareholders through dividend payments during the year. The dividend per share stood at $2 in fiscal 2016—compared to $1.85 in fiscal 2015. The company’s dividend payout ratio stood at 43% in fiscal 2016.

The one-year forward yield on Ralph Lauren’s stock stands at 2.5%—compared to VF Corporation’s 2.6% and Coach’s 3.6%. PVH and Hanesbrands have lower one-year forward yields of 0.2% and 1.7%—compared to Ralph Lauren.

ETF investors interested in getting exposure to Ralph Lauren can consider the First Trust Large Cap Core AlphaDEX Fund (FEX). FEX invests 0.42% of its portfolio in the company.

Read the next part of the series to learn about the company’s valuations compared to its peers.

Continue to Next Part

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