Movado Group, Inc. (MOV) designs, sources, markets, and distributes watches internationally. The company has two operating segments: Watch and Accessory Brands and Company Stores. It offers its watches under the Movado, Concord, Ebel, Olivia Burton, and MVMT brands, as well as licensed brands, such as Coach, Tommy Hilfiger, HUGO BOSS, Lacoste, Calvin Klein, and Scuderia Ferrari.
The stock has gained 21.7% over the past year to close its last trading session at $34.21. Efraim Grinberg, chairman and CEO of MOV, stated, "We are very pleased to continue the positive momentum from last year, reporting first-quarter results that marked a strong start to our fiscal year with record sales and profit.”
He added, “We remain confident about our growth prospects and expect to continue to benefit from our compelling product innovation and diversified brand portfolio, including the recent successful launch of Calvin Klein watches and jewelry.”
The company’s robust financial performance allows it to invest in future growth initiatives and give its shareholders stable returns through quarterly dividends and share repurchases. Based on the company’s solid fundamentals and growth prospects, our proprietary POWR Ratings system has recently upgraded the stock to Strong Buy.
Here is what could shape MOV’s performance in the near term:
Latest Developments
In February, MOV announced the worldwide launch of its Spring-Summer 2022 collection of watches and jewelry in collaboration with renowned global fashion lifestyle brand Calvin Klein, Inc., a wholly-owned subsidiary of PVH Corp. (PVH), establishing the brand’s first license under MOV. The collection is available globally at popular retail locations and online, including Calvin Klein stores and calvinklein.com.
Robust Financials
During the first quarter ended April 30, 2022, MOV's net sales increased 21.2% year-over-year to $163.42 million. Its operating income grew 90.8% from the year-ago value to $25.29 million, while its net income improved 96.8% from its prior-year quarter to $18.51 million. The company's EPS rose 97.5% year-over-year to $0.79.
Strong Profitability
MOV’s trailing-12-month net income margin of 13.23% is 101.7% higher than the industry average of 6.56%. In addition, its trailing-12-month gross profit margin of 58.02% is 57.3% higher than the 36.89% industry average.
Also, its trailing-12-month ROE, ROC, and ROA are 32.5%, 109.1%, and 141.7%% higher than the respective industry averages.
Discounted Valuation
In terms of forward P/E, the stock is currently trading at 7.98x, 28.4% lower than the industry average of 11.14x. Also, its forward EV/Sales of 0.76x is 29.7% lower than the industry average of 1.08x.
Impressive Growth Prospects
Street expects MOV’s revenues to rise 8.7% in the current year and 6.1% next year. Its EPS is expected to rise 3.6% in the current year and 6.4% next year.
In addition, MOV’s EPS is expected to rise at a 15% CAGR over the next five years. Furthermore, the company has an impressive earnings surprise history; it topped Street EPS estimates in each of the trailing four quarters.
POWR Ratings Reflect Solid Prospects
MOV has an overall A grade, which equates to Strong Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. MOV has an A grade for Value and Quality and a B for Sentiment.
MOV’s lower-than-industry valuation multiples are consistent with its Value grade. Its higher-than-industry profitability is in sync with the Quality grade. In addition, impressive consensus estimates for its revenues and earnings justify the Sentiment grade.
Among the 68 stocks in the B-rated Fashion & Luxury industry, MOV is ranked #4.
Beyond what I stated above, we have graded MOV for Growth, Quality, and Momentum. Get all MOV ratings here.
Bottom Line
MOV has gained 5.5% over the past month. The company’s robust financial performance has raised investor confidence regarding its future performance. Given the stock’s higher profitability and lower valuation, we think it could be an opportune time for investors to scoop up its shares.
How does Movado Group, Inc. (MOV) Stack Up Against its Peers?
MOV has an overall POWR Rating of A, which equates to a Strong Buy. Check out these other stocks within the Fashion & Luxury industry with A (Strong Buy) ratings: J. Jill, Inc. (JILL), Hugo Boss AG (BOSSY), and Caleres, Inc. (CAL).
MOV shares were trading at $34.63 per share on Wednesday morning, up $0.42 (+1.23%). Year-to-date, MOV has declined -15.62%, versus a -16.11% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
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