Movado Group (MOV, Financial) experienced a significant drop in its stock price today, closing 14.66% lower due to disappointing quarterly results and revised guidance.
In the second quarter of fiscal 2025, Movado reported net sales of $159.3 million, a slight decrease from $160.4 million in the same quarter last year. More notably, GAAP net income fell sharply to $3.7 million ($0.16 per share) compared to over $8 million in Q2 2024.
The company attributed the lackluster performance to a challenging consumer spending environment and increased expenses aimed at supporting future growth, as stated by CEO Efraim Grinberg.
Movado also announced a quarterly dividend of $0.35 per share, payable on Sept. 30 to investors recorded as of Sept. 16. At the current share price of $19.27, this dividend yields 7.3%.
Additionally, Movado revised its full fiscal-year 2025 guidance. The company now expects net sales between $665 million and $675 million, down from the previous guidance of $700 million to $710 million. The per-share earnings forecast has also been lowered to $0.90-$1, from the earlier estimate of $1.20 to $1.30.
From a valuation perspective, Movado is currently priced at a P/E ratio of 10.77 and holds an attractive P/B ratio of 0.85. The GF Value for Movado Group stands significantly higher than the current price, suggesting that the stock is significantly undervalued at $29.9.
The company has a strong Altman Z-Score of 3.86, indicating robust financial health. Moreover, Movado boasts a comfortable interest coverage ratio of 93.86, suggesting that it has ample capacity to cover debt obligations. However, warning signs do exist, including a high dividend payout ratio and declining revenue per share over the past 12 months.
Despite these challenges, Movado's dividend yield is close to its three-year high, and the company's operating margin has been expanding. This positions Movado as an interesting value play in the luxury goods segment, particularly for dividend-seeking investors.
Key competitors of Movado include Richemont (XSWX:CFR), LVMH (XPAR:MC), and Tapestry (TPR), and similar companies in terms of market capitalization include AxoGen (AXGN) and Dril-Quip (DRQ).
Investors should closely monitor Movado’s next earnings report, scheduled for September 5, 2024, to gauge whether the company can navigate the current headwinds and improve its financial standing.
