Shares of Movado Group (MOV - Free Report) have been strong performers lately, with the stock up 27.8% over the past month. MOV hit a new 52-week high of $49.85 in the previous session. Movado Group has gained 52.8% since the start of the year compared to the 8.9% gain for the Retail-Wholesale sector and the 17.4% year-to-date return for its peer group.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, having beaten the Zacks Consensus Estimate in each of the last four quarters. In its last earnings report on May 30, 2018, Movado Group reported EPS of $0.37 versus the Zacks Consensus Estimate of $0.12 while it beat the consensus revenue estimate by 17.3%.
For the current fiscal year, Movado Group is expected to post earnings of $2.23 per share on $611.7 million in revenues. This represents a 12% change in EPS on a 7.7% change in revenues. For the next fiscal year, the company is expected to earn $2.39 per share on $635.8 million in revenues. This represents a year-over-year change of 6.92% and 3.94%, respectively.
Movado Group may be at a 52-week high right now, but what might the future hold for MOV? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Movado Group has a Value Score of B. The stock's Growth and Momentum Scores are A and B, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 22X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 18.8X versus its peer group's average of 9X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Movado Group currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 or 2 (Buy) and Style Scores of A or B, it looks as if Movado Group passes the test. Thus, it seems as though MOV shares could have potential in the weeks and months to come.