Ralph Lauren Corp (RL) stock analysis

P/E above its 5-year median

Ralph Lauren's P/E of 22.6 is above its own 5-year median of 19.0.

P/E above the industry

Ralph Lauren's P/E of 22.6 is above the Apparel and Other Finished Products Made from Fabrics and Similar Materials median of 21.3.

EV/EBITDA above its 5-year median

Ralph Lauren's EV/EBITDA of 14.3 is above its 5-year median of 10.9.

P/B above the industry

Ralph Lauren's price-to-book of 8.60 is above the Apparel and Other Finished Products Made from Fabrics and Similar Materials median of 2.23.

Trading above fair value

The share price of $394.05 is above our fair value estimate of $296.78.

Margin of safety under 20%

The price is 32.8% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew 8.0% a year over the last three fiscal years, short of the 10% we look for.

EPS growing 10%+ a year

Diluted EPS grew 25.9% a year over the last three fiscal years.

Earnings acceleration

Needs positive net income now, a year ago and five years ago.

Growing faster than the industry

Revenue grew 12.8% over the last twelve months; the Apparel and Other Finished Products Made from Fabrics and Similar Materials median is 3.9%.

Guidance raised

Ralph Lauren raised its Fiscal 2027 constant currency revenues outlook on Aug 6, 2026.

Gross margin improving

Gross margin was 71.8% over the last twelve months, against 69.2% a year earlier.

Return on equity over 15%

Return on equity was 40.4% over the last twelve months and averaged 27.0% over five years.

Return on capital over 10%

Return on invested capital was 49.6%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

Ralph Lauren's return on equity of 40.4% is above the Apparel and Other Finished Products Made from Fabrics and Similar Materials median of 9.5%.

Earnings over 5 years

Needs positive net income five years ago and in the latest year.

Net margin above its 5-year average

Net margin was 12.6% over the last twelve months, against a 5-year average of 9.9%.

Net margin above the industry

Ralph Lauren's net margin of 12.6% is above the Apparel and Other Finished Products Made from Fabrics and Similar Materials median of 3.9%.

High debt

Debt is 45.4% of shareholders' equity, above the 40% we consider low.

Debt falling against equity

Debt to equity fell from 62.7% five years ago to 45.4%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 124% of total debt.

Interest well covered

Operating income covers interest expense 26.0 times.

Short-term assets cover short-term debts

Current assets are 1.97 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 6.40; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Ralph Lauren paid dividends worth 1.0% of the share price over the last twelve months.

Yield below Treasuries

The 1.0% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Ralph Lauren yields 1.0%.

Dividend was cut

The dividend per share fell by more than 10% at least once in the last 10 fiscal years.

Covered by earnings

Dividends take 21.0% of net income.

Cash-flow cover

Needs dividends paid and free cash flow.