Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank -- Ignore unavailable to you. Want to Upgrade?

To: Long John who wrote (30277)	3/31/1999 1:36:00 AM
From: Jenna	Read Replies (1) \| Respond to of 120523

MOVA Watch MOVA today for possible entry tomorrow. Great Earnings Are Like Clockwork For Movado At the end of earnings season, we have finally gotten what we've been waiting for. Fourth quarter results from Movado Group (Nasdaq:MOVA - news) . It was definitely worth the wait. The premier watchmaker posted earnings of $0.41 a share, up 21% from last year's $0.34 a share, and 8% above analyst estimates of $0.38 a share. The company experienced growth in all lines of businesses. Sales of Movado watches grew in double digits, leading the way amongst the company brands. The Concord unit remains sound, and a new watch should soon be launched, triggering a new marketing campaign. ESQ saw double digit growth in fiscal 1999, as it was coming off of a lousy 1998. That unit should also see a new advertising campaign slated for this year. The launch of Coach was very exciting for management, as it had a very exceeded all internal estimates. In all, it was a strong quarter for Movado, as revenues rose 15.3%. The company has successfully divested its Piaget business, which should show up as a gain in the first quarter results. Gross margins improved by 20 basis points in the quarter, and 90 points for the year. The gross margin should continue to climb into next year, as the company ramps up Coach production. In addition the divestiture of the low-margin Piaget segment should also boost margins. Operating profit continues to improve, which rose 80 basis points during the year. Management was pleased with the quarter, but admits that the balance sheet weakened. Inventories climbed 6% during last year, and trade receivables expanded 18%, slightly higher than revenues, mainly due to Coach and the Movado boutiques, which were new items for the company. Although management is looking to clean up the balance sheet a bit, we were very comfortable with it. Shareholders' equity rose by more than $20 million to $166 million. Debt rose by $20 million during the year due to an old senior note that matured. The company took out another note for $20 million, although the rates were not specified to the public yet. As far as operations are concerned, a fifth boutique is set to open in May in Las Vegas, at the Venetian hotel. The company has shipped its new Movado clocks, which have been received well. The company also mentioned that it is looking for other partners for new opportunities, as well as new watch licenses, which will support growth efforts for future years. Management was not specific about what type of deals might be out there, but they did point out that they would only enter new markets, into pricing areas they don't presently serve. That could mean a watch that retails for less than $100, or one that sells for more than $10,000. In all, we were very pleased again with Movado's earnings, and believe that even though the company divested Piaget, it will still grow revenues around 15% and earnings at 20% for fiscal 2000. The company's watches now sell in 550 retail outlets such as department stores. Current plans call for an additional 300 more to peddle the time pieces this year. In japn, that number should double to 200. As is continually the case, we feel very confident that Movado can meet or exceeding those goals. In addition, the company announced a $10 million share buyback plan, now that it has completed its previously announced $2.8 million plan. In light of all this news, we are raising our fiscal 2000 estimate to $1.90 a share, up a dime from $1.80 a share. As we raise our estimates, we are raising our long term target on the stock to $38 a share, and feel shares remain a buy, even with the stock up 16% since we recommended it again in Magic 25. Analyst: Adam Lowensteiner Updated on 3/30/99 with MOVA at $24.13 Recommended 11/16/98 at $20.75