NEW YORK, United States — Michael Kors' handbags and shares have something in common: They're both on sale.

Once the hottest fashion stock on Wall Street — driven by soaring sales of its $300 handbags — the shares have lost almost half of their value this year. The company is now trading at the lowest price-to-earnings multiple of its peers.

After years of hustling to keep up with demand, Michael Kors Holdings Ltd. is in the unfamiliar position of slashing prices to clear slow-moving inventory. Analysts estimate that fiscal first-quarter sales, which the company reports tomorrow, rose just 2.8 percent. Detractors see the slowing growth and stock drop as the inevitable consequences of a business that expanded too quickly, while others see them as a chance to buy a strong brand at a rare bargain.

"We like Michael Kors' inexpensive valuation and maintain confidence in Michael Kors' brand longevity," Oliver Chen, an analyst at Cowen & Co., said in a note. Chen, who recommends buying the shares, also said the company could benefit from sales of non-handbag merchandise, as well as the expansion of its international and digital operations.

Michael Kors shares closed Tuesday at $38.54, valuing the stock at about 8.9 times estimated earnings per share. That’s the lowest of the 20 apparel manufacturers that trade on North American exchanges and have a market capitalization larger than $1 billion.

Analysts’ Expectations

Analysts expect the stock to rebound, giving it an average price target of $53.05. An increase to that level in the next 12 months would be an almost 40 percent gain. That’s triple the median estimated return of its peers.

Chief Financial Officer Joseph Parsons said on a conference call in May that Michael Kors expects sales growth to accelerate again in the second half of the year. The company will get a boost from “compelling new products” as well as new stores and shops within other retailers’ locations, he said. Declining foreign-exchange rate pressures and better results from digital operations also will help, he said.

Alecia Pulman, a spokeswoman for London-based Michael Kors, declined to comment ahead of the company’s earnings release.

Still, Michael Kors may struggle to regain the aura of fashionability that propelled its sales and shares for so long, Camilo Lyon, an analyst at Canaccord Genuity Group Inc., said in an interview. The overabundance of its products has created a supply-demand imbalance, Lyon said.

Diminished Cachet

“What made this a great stock two years ago is exactly what’s making it a very down stock today, and that’s the rapid growth that they had in the last few years,” Lyon said. “Distribution growth got too far too fast, and the cachet of the brand has started to diminish.”

The company’s size and substantial market share also makes it harder to revive its fortunes, said Betty Chen, an analyst at Mizuho Securities.

“It becomes really difficult for some of these fashion retailers to maintain that market share and maintain popularity amongst shoppers,” she said.

By Jennifer Kaplan, with assistance from Kevin Kelly and Justin Sly. Editors: Nick Turner, Kevin Orland.