Why Fossil (FOSL) Stock Is Falling Today

NEW YORK (TheStreet) -- Shares of Fossil Group Inc  (FOSL) are falling 2.81% to $102.18 on extremely heavy trading volume after Apple (AAPL) confirmed the launch of its Apple Watch today.

Shares of the fine watch company Movado (MOV) are also down, 2.03% to $36.16, after Apple's presentation at its launch event.

However, a spokesman for Swatch Group (SWGAY) CEO Nick Hayek said the smartwatches are an opportunity and not a threat. That statement was in response to Apple design head Joney Ive's comment that the iWatch would be "trouble" for traditional watchmakers in Europe, MarketWatch reports.

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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 multiple strengths, 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 revenue growth, notable return on equity, reasonable valuation levels, 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 has had sub par growth in net income."

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

  • Despite its growing revenue, the company underperformed as compared with the industry average of 11.5%. Since the same quarter one year prior, revenues slightly increased by 9.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • 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. 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 60.76%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 6.78% trails the industry average.
  • FOSSIL GROUP INC's earnings per share declined by 14.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. 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 ($7.20 versus $6.62).
  • You can view the full analysis from the report here: FOSL Ratings Report

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