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Ignore The Insiders, Follow The Institutions To Movado Group

Ignore The Insiders, Follow The Institutions To Movado Group

Insider Ownership In Movado Group Still Strong After Selling 

Insiders were selling shares of Movado Group (NYSE: MOV) earlier this year but it is nothing for investors to worry about. Selling was broad-based among top execs, if centered on the company’s CEO, and amounted to less than 0.35% of the shares outstanding over the past 12 months. That’s a drop in the bucket especially for a company sporting a 28% insider ownership percentage. In our view, with shares up and trading at the highest levels in two years, it’s no wonder some profits were taken off the table. 

More importantly, the institutions still love Movado Group and have been net buyers over the past 12 months. Institutions own more than 63% of the company and their holdings are growing. Among some of the more recent transactions are two from Morgan Stanley and Invesco that have their combined ownership above 1.45%. In our view, with the company outperforming expectations and next year projected to be strong, it’s still a good time to get into this stock. 

Movado Group Exceeds Expectations 

Movado Group was expected to have a strong quarter but the company exceeded those expectations in all regards. The $217.7 million in consolidated revenue is up 28.2% from last year and 5.9% versus 2019 and driven by the company’s DTC/digital transformation. Not only is the revenue up strongly but it also beat the consensus by 320 basis points with strength indicated for the current quarter as well. On a segment basis, sales in the U.S. are up 41% over last year, 8% in the 2-year stack, while International sales grew a slower but still impressive 19% and 4.1% versus 2 years ago. 

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Moving down, the company was able to widen its margins and grow its earnings despite systemic headwinds. The company reports a 330 basis point improvement in the gross margin, 420 bps versus 2 years ago, to deliver robust earnings growth. The company’s operating income rose by 80% YOY and left GAAP and adjusted earnings well above target. The GAAP $1.33 and Adjusted $1.36 beat the consensus target by more than $0.30 each and resulted in increased guidance for the year. The company is now expecting revenue and earnings in a range with the consensus at the bottom of the range. 

Movado Group Raises Dividend, Buys Back Shares 

Movado Group surprised the market with more than its results. The company increased its dividend by 25% to $0.25 quarterly making the highest payout in almost ten years. Based on the history, earnings, and balance sheet, we will not be surprised to see a robust increase again next year. Until then, investors can sleep soundly knowing the 1.35% yield is reliable. As for buy-back plans, the company authorized a new $50 million buy-back plan that is worth about 5.5% of the market cap. 

The Technical Outlook: Movado Group Is On Track For New Highs 

Shares of Movado Group rocketed higher in the wake of the Q3 earnings report and set a fresh two-year high. The next target for resistance is near the $51 level and it could be reached fairly soon. With the company outperforming the 2019 business and out paying the 2019 dividend it makes sense shares should trade above the 2019 highs. A move to new highs would be very bullish as well and could lead the stock up another $20 or more. 

Ignore The Insiders, Follow The Institutions To Movado Group

A number of research analysts have issued reports on MOV shares. Zacks Investment Research downgraded Movado Group from a "strong-buy" rating to a "strong sell" rating in a report on Thursday, October 28th. TheStreet raised Movado Group from a "c" rating to a "b-" rating in a report on Thursday, August 26th.

The firm has a market capitalization of $1.04 billion, a PE ratio of 13.85 and a beta of 1.29. The stock has a 50-day moving average price of $34.63 and a 200 day moving average price of $32.34.

Movado Group (NYSE:MOV) last posted its quarterly earnings data on Tuesday, November 23rd. The company reported $1.36 EPS for the quarter, beating the Zacks' consensus estimate of $1.01 by $0.35. Movado Group had a return on equity of 15.73% and a net margin of 11.25%. During the same period in the previous year, the firm earned $0.70 earnings per share. Analysts anticipate that Movado Group will post 2.95 EPS for the current year.

The company also recently declared a quarterly dividend, which will be paid on Friday, December 17th. Investors of record on Friday, December 3rd will be given a dividend of $0.25 per share. This represents a $1.00 annualized dividend and a dividend yield of 2.21%. This is a boost from Movado Group's previous quarterly dividend of $0.20. The ex-dividend date of this dividend is Thursday, December 2nd. Movado Group's payout ratio is presently 25.48%.

In other Movado Group news, VP Mitchell Cole Sussis sold 10,324 shares of the business's stock in a transaction on Friday, August 27th. The stock was sold at an average price of $37.75, for a total transaction of $389,731.00. Following the transaction, the vice president now owns 13,870 shares of the company's stock, valued at $523,592.50. The transaction was disclosed in a filing with the Securities & Exchange Commission, which is accessible through this link. Also, Director Alan H. Howard sold 2,109 shares of the business's stock in a transaction on Monday, August 30th. The stock was sold at an average price of $38.00, for a total value of $80,142.00. The disclosure for this sale can be found here. 28.42% of the stock is currently owned by insiders.

Movado Group Company Profile (NYSE:MOV)

Movado Group, Inc engages in the design, manufacture, and distribution of watches. It operates through Watch and Accessory Brands and Company Stores segments. The Watch and Accessory Brands segment include distribution of watches and, to a lesser extent, jewelry and other accessories, of owned and licensed brands, in addition to revenue generated from after-sales service activities and shipping.

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Companies in This Article:

CompanyCurrent PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Movado Group (MOV)$33.29-3.6%4.21%8.58N/AN/A
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