Tapestry Inc (TPR)

Conclusion

Tapestry Inc is a New York-based accessories and lifestyle company that sells handbags, small leather goods, footwear and other products through its Coach and Kate Spade segments. At 136.07 USD on 9 November 2026, the company has a market capitalisation of 27.0 billion USD.

The verdict is overvalued. The P/E is 16.7 against a ten-year median of 13.6, and EV/EBITDA is 12.7 against 9.9. The DCF gives 118.30 USD per share at a discount rate of 12.2%, and the fair value from historical multiples is 104.44 USD. The fair value band runs from 89.10 to 133.65 USD with a midpoint of 111.37 USD, giving a margin of safety of -18.2% at the current price. The reverse DCF implies growth of 7.9% a year, against revenue growth of 6.9% over five years and free cash flow per share growth of 15.1% over the same period.

The case rests on the business quality: ROIC of 96.7% against a WACC of 11.6%, free cash flow conversion of 1.17 on a trailing twelve-month basis, and a Piotroski score of 8 out of 9. The weakest numbers are the price to book of 78.5 against a ten-year median of 3.7, the margin of safety of -18.2%, and the implied growth of 7.9%, which sits above the revenue growth the company has delivered.

Financial health

Financial strength is green, held up by a current ratio of 1.24, net debt to EBITDA of 0.61, interest coverage of 36.3 and an Altman Z-score of 4.17. The quick ratio is 0.43, and debt to equity is 5.70, a figure the scorecard does not assess and which deserves attention. The Altman model was designed for manufacturers, so its safe zone reading is a rough guide for this company. Insolvency risk is low, about 1.6% by the estimate of the Ohlson model over one to two years. Net debt to EBITDA is measured on a trailing twelve-month basis, and the balance sheet figures are as of 30 September 2026.

Earnings quality

Earnings quality is green, supported by a Piotroski score of 8 out of 9, free cash flow conversion of 1.17 on a trailing basis and 1.30 over five years, and an accrual ratio of -0.068, which means cash earnings exceed reported earnings. Stock-based compensation is 1.4% of revenue, and free cash flow after it is 1.77 billion USD. The share count has fallen at a compound rate of 5.8% over five years, reflecting buybacks. The Beneish M-score is not available. The company beat earnings estimates in all eight of the last eight quarters, with an average surprise of 13.96%. Estimate revisions are mildly positive, with the next year's EPS growth estimate at 11.6%.

Profitability

Profitability is green, with an operating margin of 24.5% against a ten-year median of 17.0%, a net margin of 19.7% against 12.5%, and a gross margin of 78.3% against 70.2%. Operating margin stability is 0.71. ROIC is 96.7% against a WACC of 11.6%, and the given ROIC minus WACC value is 85.1%. The five-year median ROIC is 19.9%, so the trailing figure is far above its own history. The DuPont split shows why return on equity looks so high: a net margin of 19.1%, an asset turnover of 1.20 and an equity multiplier of 9.67. Return on equity is 468.9% on a trailing basis, and leverage drives most of it.

Growth

Growth is green, held up mainly by earnings per share, which compounded at 23.3% over three years, 19.8% over five and 16.0% over ten. Revenue growth is more modest, at 6.3% over three years, 6.9% over five and 6.0% over ten. Revenue grew in seven of the last ten comparable years. Free cash flow per share compounded at 38.0% over three years and 15.1% over five. The gap between the earnings growth and the revenue growth shows that much of the earnings expansion came from margins and buybacks rather than from sales.

Valuation

Valuation is red, with the verdict overvalued and a margin of safety of -18.2%. The P/E is 16.7 against a ten-year median of 13.6, a premium of 22.8%. EV/EBITDA is 12.7 against 9.9, a premium of 28.4%. Price to free cash flow is 14.4 against 14.1, a premium of 1.6%. Price to sales is 3.30 against 1.75, a premium of 88.5%, and price to book is 78.5 against 3.73, a premium of 2001.7%. The DCF gives 118.30 USD per share, using a discount rate of 12.2%, growth of 6.9% and a terminal growth rate of 2.5%. The fair value from historical multiples is 104.44 USD. The reverse DCF implies growth of 7.9%, against 6.9% revenue growth delivered over five years. The dividend yield is 1.2%, with a payout of 17.8% of free cash flow. These fair values are order-of-magnitude estimates built on fixed assumptions, not price targets.

Risks

The main risk is valuation. If growth slows toward the revenue growth actually delivered, the implied growth of 7.9% would not be met and the price would be harder to justify. A high price to book of 78.5 and a debt to equity ratio of 5.70 leave little room for error if earnings weaken. Debt to equity is not assessed in the scorecard, so its effect is not captured in the financial strength colour. The DCF relies on a terminal value that represents 43.2% of its total, so the result is sensitive to the discount rate and the terminal growth rate. The Beneish M-score is not available, and the company's debt maturity schedule and revenue by segment are not part of this analysis.