Fossil, Inc. (FOSL) recently surged to a new all-time high at above $70 after reporting an awesome Q3 earnings surprise of 35%. With retails sales showing signs of strength ahead of the holidays, this Zacks #1 rank stock has momentum wrapped up in a box.
Company Description
Fossil, Inc. designs, sells and licenses fashion accessories like watches, wallets and jewelry worldwide. The company was founded in 1984 and has a market cap of $4.62 billion.
It’s game time for the retailers, with the prime-time holiday spending season once again on hand. If Fossil’s Q3 results from Nov 9 are any indication, its shareholders should be pleased.
Third-Quarter Results
Revenue for the period was up 37% from last year to $524 million. Earnings also looked great, coming in at $1.00, 35% ahead of the Zacks Consensus Estimate, where the company now has an average earnings surprise of 64% over the last four quarters.
The company was strong across multiple regions, with North America wholesale shipments up 50% to $69 million while Europe wholesale shipments were up 34.5% to $38.3 million. Fossil is also seeing big gains in its direct sales, up 30% from last year to $28 million.
The company’s solid top-line growth was accompanied by nice margin improvements, with gross margin increasing to 57% from 55.3%.
Balance Sheet
Fossil also has a very strong balance sheet, with its cash and equivalents up $74 million from last year to $372 million with a marginal debt load of just $4 million.
Estimates
We saw some pretty bullish movement in estimates off the good quarter, with the current year adding 35 cents to $3.63 and the next-year estimate adding 14 cents to $3.78, a respectable 4.2% growth projection.
In light of recent gains, FOSL trades at a premium to its peers, with a forward P/E of 19X .
2-Year Chart
On the chart, FOSL recently jumped higher on the good quarter to hit a new all-time high above $70. Look for support from the longer-term trend line on any weakness. Take a look below.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.
FOSSIL INC (FOSL): Free Stock Analysis Report
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