Tapestry (TPR) recently announced a significant share repurchase program of up to $3 billion, coupled with their board's approval, which aligns with their robust free cash flow strategy. Despite posting a net loss of $517 million in the latest quarterly earnings and a decline in EPS, the company increased its quarterly dividend by 14% to $0.40 per share. Over the past quarter, Tapestry's share price rose by 29%, potentially buoyed by the buyback news and continued market optimism, with indices like the S&P 500 and Nasdaq reaching all-time highs.

Tapestry's recent announcement of a significant US$3 billion share repurchase program, despite a US$517 million net loss, indicates a firm commitment to returning value to shareholders through capital management. This buyback, coupled with a dividend increase, is reflective of the company's robust free cash flow position and may bolster investor confidence despite short-term earnings challenges. Over the last five years, Tapestry's total return, including share price and dividends, has been a very large 604.65%. Comparatively, it outperformed the broader US luxury industry over the past year, which saw a return of just 2.1%.

This strategic move is seen as potentially reinforcing Tapestry's revenue and earnings forecasts, particularly through its focus on expanding its presence in younger demographics and international markets. Analysts forecast revenues to grow by 3.6% annually and earnings to reach US$1.4 billion by 2028, indicating optimism about future performance. The share price movement of 29% over the past quarter, possibly spurred by the buyback news, positions Tapestry closer to the consensus price target of US$114.56, which is 8.8% higher than the current share price of US$105.18. This relatively modest gap suggests that analysts view the stock as fairly priced, yet reliant on achieving the expected growth metrics.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.