Movado: Still A Buy, But No Longer A Bargain
Summary
I am maintaining a BUY rating on Movado, but conviction is lower. At roughly 16.7x [my FY2027 EPS estimate], the shares no longer qualify as deeply discounted.Q2 FY2027 net sales rose 4.9% to $169.8Mn and adjusted EPS reached $0.54. Excluding the $0.11 duty-refund benefit, adjusted EPS was still about $0.43, up sharply from $0.23 a year earlier.
The central operating thesis was strengthened. First-half sales grew 6.3%, gross margin excluding refunds expanded 330 basis points, and free cash flow improved to about $4.2Mn from negative $13.8Mn.
My base case values Movado at $36.00 per share, using 17x my $2.33 FY2028 adjusted EPS estimate and discounting the future value back one year at 10%. That implies 10.7% price upside from $32.51, before the current $1.60 annualized dividend.
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