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Coach (NYSE:COH) stock opened at $57.73 today versus its 52-week range of $48.24-$79.70. The stock trades with a P/E multiple of 15 times, and a forward multiple of 13 times. The P/E multiple is close to its historical trough levels since 2003, and below the historical average of 19 times. The stock trades with a EV/EBITDA multiple of 8.2 times, which is also below historical levels of 13 times in 2010, 11 times in 2011, and 10 times in 2012. The dividend yield on the stock is 2.2%. The company's competitor Michael Kors Holdings (NYSE:KORS) trades with a P/E multiple of 38 times versus a forward multiple of 29 times.

As of June 29th, 2012, the top institutional holders of the stock are The Vanguard Group (4.3%), Jennison Associates (3.25%), Blackrock Institutional (3.2%), Sands Capital Management (3.2%), and FMR, LLC (2.5%)

This week, Coach reported Q1-2013 quarterly results, with Net sales coming in as $1.6 billion, in-line with consensus. North American Sales increased 8% year-over-year to $784 million, and international sales were up 15% year-over-year to $362 million, primarily contributed by China, which was up 40%. Two factors helped the growth in China, namely, the Chinese tourists to the U.S. that have shown increased interest in the higher end retail products, and the growth in China, which has intensified interest in the mid to upscale luxury brands.

Legacy sales have shown significant global growth potential, partly helped by marketing, and advertising. As management adds new products to the line, this growth is expected to continue into FY2013, and beyond.

A big winner in earnings was stability in full-price sales. The company reported that promotional activities have been decreasing year-over-year. Investors were concerned that margins would be sacrificed to increase sales, especially by promotions given to loyal customers, and on-line discount offers.

Coach has a strong balance sheet with $761 million in cash & cash equivalents as of Q1-2013, and $0 public debt. The company has continued to generate strong free cash flow, reported as $146 million for Q1-2013 versus $194 million last year.

The company continues to have an aggressive share buy-back program. During the quarter, Coach bought 3.1 million shares of its common stock at an average cost of $56.59, spending a total of $175 million. The company also announced that a new $1.5 billion share buy-back program to be completed by June 30, 2015. This buyback program provides further support to the stock, and clearly shows the management's discipline to continue to return cash to investors.

As discussed above, the stock looks very attractive on both valuation, and strong fundamentals. Additionally, the share buy-back program provides a floor for the stock. Management is bullish about industry trends, and expects that the global luxury handbag, and accessories market will grow from $23 billion in FY2009 to $29 billion in FY2013. Not to forget that the stock also pays you a 2.2% dividend yield to participate in the long-term growth of the fundamentals.

Source: Coach: Strong Fundamentals, And Attractive Valuation