Michael Kors Holdings Limited (NYSE:KORS) has managed to become a successful mid-tier to higher end retailer while many other competitors are struggling. I chose to highlight this company for two reasons. First, the stock is reacted quite badly yesterday after announcing its Q4 earnings. A biggest loser on Wednesday was Michael Kors. Shares of the lifestyle brand company lost nearly a quarter of their value after reporting earnings as investors did not like the company's guidance. Management detailed a significant hit to results from currencies, something many companies are detailing with right now. The fall put shares at a 2-year low, as seen in the chart below, but today I'll detail why this may present a buying opportunity.For the fourth quarter, revenues were in-line with expectations at $1.08 billion, but the company missed on the bottom line by a penny. Investors were most disappointed with the following guidance, and I've bolded analyst estimates:
-- Q1 revenues of $930-$950 million vs. $1.09 billion.
-- Q1 EPS of $0.74 to $0.78 vs. $1.03.
-- Full year revenues of $4.7-$4.8 billion vs. $5.05 billion.
-- Full year EPS of $4.40 to $4.50 vs. $4.70.
In Q1, the company expects a $60 million hit to revenues and $0.07 hit to EPS from currencies. For the full year, ending March 2016, the impact is expected to be $200 million and $0.20. On a constant currency basis, the company is still looking for revenue growth in the low to mid-teens, and a low single digit comparable store sales increase. Management also stated on the conference call that it expects to see double digit top and bottom line growth in fiscal 2017 as it continues its worldwide expansion plans.
Due to the lower than expected forecast, we are going to see analysts estimates come down over the next couple of weeks. However, the company is still showing growth, and after the stock's huge plunge, the valuation looks quite attractive. In the chart below, I've detailed where Michael Kors' forward valuation stands against peers Coach Inc (NYSE:COH), Ralph Lauren (NYSE:NYSE:RL), and Kate Spade & Co (NYSE:KATE), for their respective fiscal periods.After Wednesday's substantial fall, KORS shares trade for just over 10.3 times the EPS midpoint of its fiscal 2016 guidance. 
The other names above average more than 21.5 times, and if we pulled Kate Spade's figure closer to the timeline of the other three, the average would be closer to 25 times. At 14 times the low end of Michael Kors' guidance ($4.40 a share), a very fair valuation in my opinion, we would have a price target of $58, implying more than 30% upside from Wednesday's close. One item that will certainly help shares is the company's buyback, and we got a big update on that from the company:
"We remain confident in our long-term growth outlook and free cash flow generation, and are pleased to announce that the Board of Directors has authorized the repurchase of an additional $500 million of the company's ordinary shares and has extended the program through May 2017. This increases the initial repurchase authorization to $1.5 billion, of which $1 billion is available to us for future repurchase over the next two years.Michael Kors finished Wednesday's session with a market cap below $9.2 billion. Even if your account for some executive compensation, you're still talking about the company being able to repurchase more than 10% of its outstanding shares over the next two years. I think that the buyback will allow the company to beat its EPS numbers because the share count will come down quickly.
The company will certainly be buying shares after this drop, as CEO John Idol provided the following statement on the conference call:
We believe as a management team, and as a company, that our stock price is significantly undervalued. Management expects a 200 million diluted share count for the fiscal 2016 period, but the company might be able to get under that number in Q1 if it buys back enough stock. That leaves three more quarters to get the share count further down, so I wouldn't be surprised if we see a diluted share count in the 195-200 million range for the year. At the bottom end of that range, you're looking at about a $0.10 or so boost to EPS, which could help get the name closer to what analysts were originally looking for."
In the end, Michael Kors shares fell to a two-year low on Wednesday as investors shrugged off the company's results and guidance. While currencies will certainly hurt, I think the valuation of this stock is too low to ignore. Management believes that shares are extremely undervalued, and a billion dollar buyback will be very powerful over the next two years. I made the case today for a stock that's worth more than $60, providing a lot of upside from current levels.
-- Support - $43.11 -- $40.56 -- $35.48
-- Resistance -- $47.79 --$51.13--$55.62