Fossil Inc.

Company Description

Fossil, Inc. develops and sells various fashion accessories like apparel, jewelry, handbags and watches worldwide. The company was founded in 1984 and has market cap of $2.16 billion.

The consumer environment remains weak, but has made significant progress from earlier in the year when many feared the global economy was on the verge of collapsing. This dynamic and strong third-quarter results, reported on Nov 10 have lifted the company's share price to a new 52-week high.

Third-Quarter Results

Sales were down a bit from last year, off 7% to $381.4 million. But earnings came in ahead of the mark at 52 cents per share, 10 cents better than the Zacks Consensus Estimate. The company has beat in each of the last 4 quarters by an average of 8 cents, or 37%.

The company noted improvements in a number of key areas. Its cash balance increased to $306.7 million from $125.2 million while reducing its inventory and receivables by 15.7% and 19.5%. Operating expenses were down $7.1 million from last year to $153.4 million.

Estimates Up

Estimates jumped higher after the good quarter, adding 13 cents and moving to $1.84 per share. The next-year estimate is pegged at $2.03, a 10.5% growth projection.

Valuation

Shares of FOSL still look reasonably priced after the big run up, trading with a forward P/E of 17.5X, in line with the overall market.

The Chart

Shares of FOSL are up close to 200% after bottoming out just above $11 in early March. More recently, shares gapped higher on the nice earnings surprise, take a look below.

Read the full analyst report on FOSL