Update (9:48 a.m.): Updated with Wednesday market open information.
Jefferies also decreased its price target on Fossil to $140 and set a "buy" rating. The firm noted the company's soft second-quarter outlook with higher SG&A spending and ongoing North American struggles likely to pressure the stock.
The stock was down 8.43% to $102.05 at 9:47 a.m. on Wednesday.
Separately, TheStreet Ratings team rates FOSSIL GROUP INC as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate FOSSIL GROUP INC (FOSL) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, revenue growth, notable return on equity, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- FOSSIL GROUP INC has improved earnings per share by 6.8% 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 GROUP INC increased its bottom line by earning $6.62 versus $5.62 in the prior year. This year, the market expects an improvement in earnings ($7.24 versus $6.62).
- Despite its growing revenue, the company underperformed as compared with the industry average of 15.4%. Since the same quarter one year prior, revenues rose by 12.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- 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 59.44%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 13.97% is above that of the industry average.
- Despite currently having a low debt-to-equity ratio of 0.48, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that FOSL's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.59 is high and demonstrates strong liquidity.
- You can view the full analysis from the report here: FOSL Ratings Report