Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
) has been reiterated by TheStreet Ratings as a buy with a ratings score of B . The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, increase in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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Highlights from the ratings report include:
- FOSSIL INC has improved earnings per share by 15.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, FOSSIL INC increased its bottom line by earning $4.62 versus $3.79 in the prior year. This year, the market expects an improvement in earnings ($5.32 versus $4.62).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Textiles, Apparel & Luxury Goods industry average. The net income increased by 11.6% when compared to the same quarter one year prior, going from $51.36 million to $57.34 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 19.2%. Since the same quarter one year prior, revenues rose by 14.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- FOSL's debt-to-equity ratio is very low at 0.10 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.13, which illustrates the ability to avoid short-term cash problems.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Textiles, Apparel & Luxury Goods industry and the overall market, FOSSIL INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
Fossil, Inc. designs, develops, markets, and distributes consumer fashion accessories worldwide. The company has a P/E ratio of 18.5, equal to the average consumer durables industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Fossil has a market cap of $5.4 billion and is part of the
industry. Shares are up 11.9% year to date as of the close of trading on Friday.
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--Written by a member of TheStreet Ratings Staff.
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