Michael Kors stock has had a fabulous run, but investors' opinions about whether its shares are about to go out of fashion may hinge on two questions: Has the brand maxed out its U.S. potential? And how much of a boost can it get from expanding in Europe?
There is no doubt that the pace of both Michael Kors' revenue growth and its stock gains look difficult to sustain over the long-term. Quarterly revenue has grown an average of 55.6 percent year over year since going public in December 2011, according to Thomson Reuters data. Meanwhile, shares have soared 312 percent over that same time period. Given that the stock is down 18 percent since it touched its all-time high of $101.04 on Feb. 25, some analysts are expressing concern over the once high-flying stock, while others continue to defend its trajectory and see its current weakness as a reason to buy.
"When you think about the growth over the past two years, it's been fairly unprecedented," said Barclays retail analyst Joan Payson. "We really don't have much to compare it with within the space that could indicate whether there has been a bubble or not."