Tapestry, Inc. (TPR): what the price requires
At today's price, Tapestry, Inc. (TPR) is priced for +10.4% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/TPR
Headline
| Field | Value |
|---|---|
| Ticker | TPR |
| Company | Tapestry, Inc. |
| Sector / Industry | Consumer Cyclical / Luxury Goods |
| Current price | $135.96/sh |
| Composition | United States 60% / Greater China 15% / Japan 7% / Other 18% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 15.9% |
| Operating margin today | 22.4% |
| Margin compression implied | -6.5pp |
| Implied growth | 10.4% |
| Multiple paid | 13x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 10.8% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~4.7pp.
Reconcile: at the x-ray's 9.3% required return this reads ~3%/yr; the models below use their own rates.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | +0.64σ |
| cohort percentile (of 210 peers) | 26 |
| sustained it ~5 years at this level | 60% |
| implied end-window share | 0% |
Valuation X-Ray
Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 3.15x | 4 | expensive |
| Earnings | 2.07x | 4 | expensive |
| Relative | 2.41x | 3 | expensive |
| Growth | 0.56x | 3 | justifies |
Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.2%); the inversion above states its own rate.
Per-Model Detail (n=14)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $343.82 | 0.40x | yes | FCF base $1.9B, growth 14% (input: historical growth), terminal g 4.0%, WACC 8.2%, 6yr projection |
| DCF Exit Multiple | Growth | $243.91 | 0.56x | yes | Exit EV/EBITDA: 27.6x / 29.6x / 31.6x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $87.26 | 1.56x | yes | P/E 26.82x (blended: static sector reference 20x + trailing (TTM) 43x), scenarios: 22.0x / 26.8x / 31.6x (bear / base = reference held flat / bull), EV/EBITDA 17.98x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $34.40 | 3.95x | yes | BV/sh $3.28, ROE (TTM) 97.1%, ke 9.3% |
| Two-Stage Excess Return | Asset | $228.33 | 0.60x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $161.66 | 0.84x | yes | Rev $7.9B, growth 14% (input: historical growth; tapered), Terminal P/S: 3.0x / 3.6x / 4.3x (bear / base = today's held flat / bull, cap 12x) |
| Growth-Adjusted P/E | Relative | — | — | no | — |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $60.34 | 2.25x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $1.30B × (1−17%) / WACC 8.2% → EPV (no growth) |
| Residual Income | Asset | $58.02 | 2.34x | yes | BV $3.28 + 5yr PV of (ROE (TTM) 97.1% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $15.62 | 8.70x | yes | √(22.5 × EPS $3.31 × BVPS $3.28) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $51.93 | 2.62x | yes | EBITDA $1.05B × sector EV/EBITDA 13.0x |
| FCF Yield | Earnings | $77.18 | 1.76x | yes | FCF $1755.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $71.72 | 1.90x | yes | SBC-adj FCF $1.65B (FCF $1.75B − SBC $0.11B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $2.77 | 49.08x | yes | EPS $3.31 × (8.5 + 2×-5.0%) × (4.4 / 5.3%) (excluded from median) |
| ROIC-Justified P/B | Asset | $3.95 | 34.42x | yes | BV $3.28 × (ROIC 9.9% / WACC 8.2%) (excluded from median) |
| P/Sales Sector | Relative | $56.53 | 2.41x | yes | Revenue $7.85B × sector P/S 1.5x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | $35.78 | 3.80x | yes | EPS $3.31 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $1.3b |
| Net debt / NOPAT (after-tax) | 0.93x |
| Net debt / operating income (pre-tax) | 0.77x |
| Interest coverage | 14.0x |
| Share count CAGR (buyback) | -5.9% |
| Burning cash | no |
Bullet Takeaways
- Tapestry is riding the strongest run in Coach's modern history, with brand revenue up 29% in constant currency in the March 2026 quarter and 2 million new customers added, driving a raised full-year outlook of roughly $7.95 billion in revenue.
- The trailing 44.2x earnings multiple overstates the price: GAAP profit absorbed the "impairment charge of $610.7 million related to the Kate Spade indefinite-lived brand intangible" disclosed in the FY2025 10-K, while trailing free cash flow of $1.75B puts the cash yield near 6%.
- Watch whether Kate Spade's guided low-double-digit revenue decline flattens and how much of the roughly 180 basis points of tariff pressure on gross margin gets offset in the fiscal fourth-quarter report.
Bull Case
Here is the number that does not fit the obvious story: a stock apparently priced at 44 times earnings is generating a free cash flow yield of about 6%. The two facts coexist because trailing GAAP earnings absorbed a $610.7 million non-cash write-down of the Kate Spade brand intangible, disclosed in the FY2025 10-K (accession 0001116132-25-000019), while the cash machine ran at full speed: $1.90B of operating cash flow and $1.75B of free cash flow over the trailing year, positive in all four quarters, converting several times the depressed net income line. The market value is being serviced by handbag cash flows that the headline multiple pretends are smaller than they are.
The engine is Coach, and it is running hotter than at any point in the brand's modern era. Third-quarter fiscal 2026 revenue grew 23% overall with EPS up 62%, Coach constant-currency revenue rose 29%, the brand added 2 million new customers in a single quarter, and management now guides Coach to more than 20% growth for the full year. This is what pricing power looks like in accessible luxury: a brand acquiring younger customers at full margin while competitors discount. Capri, the closest structural comparable, is still rebuilding its brand portfolio around accessories expansion per its own filing (accession 0001530721-25-000052); Tapestry meanwhile raised its full-year outlook to roughly $7.95 billion of revenue and about $6.95 of EPS.
Capital allocation amplifies the equity story. The share count is falling, the dividend holds at $1.56 annualized, and years of buybacks have compressed book equity to $3.28 a share, which is why return on equity prints at an extreme 97%; the real signal is that nearly every dollar of the market value is claim on brand cash flow rather than balance-sheet assets, and that cash flow is growing. Leverage is moderate and well covered, the solvency read is safe-zone, and the growth-anchored valuation methods sit above today's price. If Coach merely keeps a fraction of its current momentum while Kate Spade stabilizes, the cash yield does the rest.
Bear Case
Accessible luxury is a category with a documented cycle: a hot brand compounds for several years, saturates its customer base, discounts to hold volume, and spends the next half-decade rebuilding. The bear case starts by asking where Coach sits in that arc after a 29% constant-currency quarter, because the price now depends on the answer. The framework's margin read makes the demand explicit: to justify today's level, company-wide operating margin needs to reach about 16.9% over the long run against roughly 11.3% earned today, a jump of about 5.6 points the business has not demonstrated. Peak-brand momentum funding a margin assumption beyond anything in the trailing record is the classic late-cycle trade in this sector.
The portfolio behind the lead brand is not confirming the story. Kate Spade revenue fell 11% in the March quarter and is guided to a low-double-digit decline for the full year; the FY2025 10-K's $610.7 million brand impairment (accession 0001116132-25-000019) was the accounting system saying the earlier growth assumptions failed, and the filing lists the live risks to the brand's cash flows "including the optimization of the store fleet". Geography adds a second soft layer: the United States, 80% of revenue, has grown less than 1% over roughly three years, and Japan has shrunk 11.1% over the same window. Strip out Coach and this is a flat-to-declining company. Tariffs are the newest structural tax, cutting gross margin by roughly 180 basis points in the quarter, 440 basis points at Kate Spade, and the 10-K warns such measures "could require us to absorb costs or try to pass costs" to customers.
The valuation methods are not generous about any of this. Only the growth-anchored cash-flow methods reach the price; the asset, earnings-power, and peer-multiple frames read it at 2.5x to 3.6x their marks, and on the EDGAR quarterly TTM basis operating income was roughly $889 million against the fuller inversion-record basis of $2.3 billion, a 161% gap driven by charges that GAAP counts and the bull narrative excludes. Add debt at 3.5x a buyback-thinned equity base, and the structure is a leveraged single-brand momentum bet at a price the static methods will not underwrite. If Coach's comps decelerate to sector-normal, the multiple, the margin assumption, and the leverage all get re-examined in the same quarter.
Valuation
The price is a bet on Coach's durability, and the arithmetic is specific. At $140.74 (July 11, 2026), the market pays about 14 times company-wide operating income on the fuller inversion-record basis, embedding roughly 11.8% annual operating-profit growth for five years. That pace is within what the company has recently delivered, the multiple actually sits in the lower half of its peer range, and about 57% of comparable fast-growers historically sustained such growth for five years, favorable odds by the standards of premium-priced names. A measurement note matters here: trailing operating income reads about $2.3 billion on that record basis but only $888.6 million on the EDGAR quarterly TTM basis, the difference dominated by non-cash charges including the Kate Spade brand impairment the 10-K discloses at "$610.7 million" (accession 0001116132-25-000019); every trailing multiple inherits whichever basis it is built on, which is why the P/E prints at a misleading 44.2x against a 20x sector median.
The method families split along the same fault line. Only the growth-anchored cash-flow methods reach the price, sitting well above it at 0.6x. The asset-based (3.6x), earnings-power (2.5x), and peer-multiple (2.5x) frames all read the price as rich because they capitalize the charge-depressed trailing numbers. The cash flow statement adjudicates in the growth methods' favor: $1.75B of trailing free cash flow, a 6.0% yield on the $29.32B market value, with all four quarters positive. The one genuinely demanding assumption is margin: on the separate value-band read, the price wants roughly 16.9% long-run operating margin versus about 11.3% today, and that gap is the honest cost of admission. The raised fiscal 2026 outlook, roughly $7.95 billion of revenue and about $6.95 of EPS, is the near-term down payment.
Solvency shapes the risk rather than threatening it: leverage is moderate and well covered, but debt of 3.5x a $3.28-per-share book equity means the equity is a thin, high-torque slice atop the brand cash flows; the falling share count keeps concentrating that claim. The decisive variable is singular for a two-brand company: how long Coach's 29% constant-currency growth fades toward the sector's norm, because the fade path is worth more than every other line item combined.
Catalysts
The fiscal fourth-quarter report, closing out the June 2026 year, is the next checkpoint against a raised bar: management guided full-year revenue to approximately $7.95 billion and EPS to about $6.95 after the March quarter delivered $1.92 billion of revenue (up 23%) and EPS of $1.66 (up 62%). The print doubles as the venue for initial fiscal 2027 guidance, which will show whether management believes Coach's momentum, guided above 20% growth for fiscal 2026, extends into a third year.
Brand-level trajectories are the substance underneath. Coach added 2 million new customers in the March quarter, and the sustainability of that acquisition pace, particularly with younger cohorts, is the single most important operating indicator. Kate Spade, guided to a low-double-digit full-year revenue decline but with gross margin and profitability tracking above plan, approaches the point where the turnaround must show revenue stabilization, not just cost discipline; the FY2025 10-K's impairment discussion makes store-fleet optimization the visible lever (accession 0001116132-25-000019).
Tariffs are the running cost headwind to track quarter by quarter: roughly 180 basis points of gross-margin impact company-wide in the March quarter, concentrated at 440 basis points for Kate Spade, with mitigation through sourcing shifts and pricing the offsets to watch. Capital returns continue alongside: the share count keeps falling and the dividend holds at $1.56 annualized, and with $1.75B of trailing free cash flow the pace of buybacks into any post-earnings weakness will indicate how management weighs its own stock against the momentum the market is paying for.
Peer Cohorts (Per Segment, With Filing Citations)
Coach / Kate Spade (reported)
- CPRI (Capri Holdings Ltd)
- (no filing in the citation store)
- RL (RALPH LAUREN CORPORATION)
- (no filing in the citation store)
- PVH (PVH Corp.)
- (no filing in the citation store)
- GIII (G III APPAREL GROUP LTD /DE/)
- (no filing in the citation store)
- KTB (KONTOOR BRANDS, INC.)
- (no filing in the citation store)
- VFC (V. F. CORPORATION)
- (no filing in the citation store)
Stuart Weitzman (reported)
- SHOO (STEVEN MADDEN, LTD.)
- (no filing in the citation store)
- WWW (WOLVERINE WORLD WIDE, INC.)
- (no filing in the citation store)
- DECK (DECKERS OUTDOOR CORP)
- (no filing in the citation store)
- CROX (CROCS, INC.)
- (no filing in the citation store)
- ONON (On Holding AG)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
FY2026 Q3 earnings release, May 7, 2026 · FY2026 Q3 earnings call, May 2026 · FY2026 Q3 earnings release and call, May 7, 2026 · Business Wire, May 7, 2026 · FY2026 Q3 earnings call, May 7, 2026 · Investing.com Q3 FY26 slides coverage · FY2026 Q3 earnings call · Business Wire and earnings call, May 7, 2026 · Investing.com Q3 FY26 slides coverage, May 2026