Movado Group (NYSE: MOV) released fiscal third-quarter 2019 results last week, which included broad-based geographic strength and the promise of incremental growth from the watchmaker’s recent acquisition of MVMT. While shares initially popped nearly 13% in response to the news, Movado stock has all but given up those gains in the days since to trade near a nine-month low.
Now that the dust has settled, let’s take a closer look at what Movado had to say and what we can expect as it closes its fiscal year.
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Movado Group results: The raw numbers
| Metric |
Fiscal Q3 2019* |
Fiscal Q3 2018 |
Year-Over-Year Growth |
|---|---|---|---|
|
Net sales |
$208.9 million |
$190.7 million |
9.6% |
|
GAAP net income (loss) |
$26.9 million |
$17.4 million |
54.6% |
|
GAAP earnings (loss) per share |
$1.14 |
$0.75 |
52% |
What happened with Movado this quarter?
- Net sales grew 10% on a constant-currency basis.
- On an adjusted (non-GAAP) basis, which excludes unusual tax adjustments and acquisition expenses, net income was $27.9 million, or $1.18 per diluted share, up from $24.3 million, or $1.04 per share in the same year-ago period.
- By contrast, most analysts watching the stock were modeling lower adjusted earnings of $1.12 per share on revenue of $205.4 million.
- On October 1, 2018, Movado completed its previously announced $200 million acquisition of MVMT, including a $100 million initial payment (or $85 million net of tax benefits) and up to $100 million in future pre-tax contingent payments.
- Movado ended the quarter with $142.7 million in cash and cash equivalents.
- Movado repurchased and retired 46,800 shares this quarter, leaving $44.1 million remaining under its current repurchase authorization.
What management had to say
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Movado chairman and CEO Efraim Grinberg added:
Looking forward
Movado reiterated its full fiscal-year 2019 guidance, which — assuming current exchange rates remain consistent — calls for net sales of $660 million to $675 million and net income per share of $2.45 to $2.55.
All told, there was little not to like about this impressive quarter. In fact, similar to its unusual post-earnings decline three months ago — and with shares up nearly 33% in the year leading up to these results — it seems Movado’s elevated share price was the only thing with which the market might have taken offense. As such, I think patient long-term investors could do well to take advantage of this pullback and consider opening or adding to a position today.
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Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
