Michael Kors Holdings Ltd (KORS): This Insider Made 32% the Last Time She Bought

Insider activity held steady last week with purchases records from 118 companies. It will be fascinating to see how the Ukrainian situation impacts boardroom buying next week.

This week iStock is going in style today with our highlighted insider buying stock, Michael Kors Holdings Ltd (NYSE:KORS). Michael Kors engages in the design, marketing, distribution, and retailing of branded women's apparel and accessories, and men's apparel. The company operates in three segments: Retail, Wholesale, and Licensing. The Retail segment is involved in the sale of women's apparel; accessories, which include handbags and small leather goods, such as wallets; footwear; and licensed products comprising watches, fragrances, and eyewear.

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KORS Director, Judy Gibbons 1,980 shares on February 26, 2014 at $100.17 per share for a total investment of $198,336. This isn't the first time Ms. Gibbons opened the purse strings to buy the consumer goods company's shares. In September 2013, she bought 2,125 shares at $74.68 for a total investment of $158,695. Today, the September investment is worth almost $210,000 – again of 32% in six months.

Perhaps, the director is trying to profit, again, from a phenomenon known as post-earnings announcement drift (PEAD). PEAD is the tendency for a stock to produce above average and abnormal returns following positive earnings announcements. Last quarter, KORS topped Wall Street's consensus estimate by $0.25, which worked out to 29.1% more than expected.

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Maybe, valuation is another angle? The high-fashion, luxury brand has traded with high price-to-earnings (P/E) and price-to-sales (P/S) during its short life as a publicly traded company.

Since IPOing, the average P/E is 37.94 while the typical P/S ratio is 5.86. For 2014, analysts believe KORS EPS will come in at $3.12 and $3.84 for 2015; however, both could be higher considering the company's history of bullish earnings surprises. At the average P/E, Gibbons's shares would be worth $118.37 and $145.68 based on this year and next year's earnings forecasts.

On the sales side, buy-side analysts believe KORS will earn $3.21 billion this year and $4.05 billion next. Based on Michael Kors' limited P/S history, shares would price out at $92.58 and $116.80 for 2014 and 2015's top line outlooks.

Overall: Judy Gibbons previous success with Michael Kors Holdings Ltd (NYSE:KORS) merits considerations; however, repeating 32% performance might take a lot longer than six months based on KORS' average price-to-earnings and price-to-sales, IPO to date.