Fossil Inc. Stock Buy Recommendation Reiterated (FOSL)

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 ( TheStreet) -- Fossil (Nasdaq: FOSL) 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 revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, expanding profit margins and good cash flow from operations. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

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Highlights from the ratings report include:
  • FOSL's revenue growth has slightly outpaced the industry average of 1.3%. Since the same quarter one year prior, revenues slightly increased by 6.4%. 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 0.16 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 1.12, 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.
  • The gross profit margin for FOSSIL INC is rather high; currently it is at 58.20%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 11.22% is above that of the industry average.
  • Net operating cash flow has significantly increased by 7431.73% to $32.11 million when compared to the same quarter last year. In addition, FOSSIL INC has also vastly surpassed the industry average cash flow growth rate of -10.96%.

Fossil, Inc. designs, develops, markets, and distributes consumer fashion accessories worldwide. Fossil has a market cap of $6.37 billion and is part of the consumer goods sector and consumer durables industry. The company has a P/E ratio of 21.5, above the S&P 500 P/E ratio of 17.7. Shares are up 14.6% year to date as of the close of trading on Wednesday.

You can view the full Fossil Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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