Fossil Group (FOSL) Stock Tanked Ahead of Quarterly Earnings Release

Fossil Group (FOSL) closed today's trading session down ahead of the consumer fashion accessories company's third quarter 2015 earnings results due out after Thursday's closing bell.
By U-Jin Lee ,

NEW YORK (TheStreet) -- Fossil Group (FOSL) - Get Report  closed today's trading session down 4.16% to $52.04 on heavy trading volume ahead of the consumer fashion accessories company's third quarter 2015 earnings results due out on Thursday after the closing bell. 

Year-over-year, both profits and sales are projected to decline.

For the recent quarter, analysts are expecting Fossil Group to earn $1.13 a share on revenue of $793.72 million.

In the same period a year ago, the company earned $1.96 a share on revenue of $894.50. 

At the close, more than 2.2 million shares had changed hands, above the company's average trading volume of about 1.17 million shares. 

Based in Richardson, TX, Fossil Group designs, develops, markets, and distributes consumer fashion accessories.

Separately, TheStreet Ratings team rates FOSSIL GROUP INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

We rate FOSSIL GROUP INC (FOSL) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its notable return on equity, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Textiles, Apparel & Luxury Goods industry and the overall market, FOSSIL GROUP INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for FOSSIL GROUP INC is rather high; currently it is at 58.25%. Regardless of FOSL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 7.38% trails the industry average.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Textiles, Apparel & Luxury Goods industry average, but is greater than that of the S&P 500. The net income increased by 4.0% when compared to the same quarter one year prior, going from $52.52 million to $54.65 million.
  • FOSL's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 44.88%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • You can view the full analysis from the report here: FOSL
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