Institutions Like The Look Of Movado Group
The insiders have been selling shares of Movado Group (NYSE: MOV) but so what? The selling has been very light and they still own more than 28% of the company so there is no red flag to worry about. Instead, focus on the institutions and their activity because it has been bullish. The institutions have, over the last year, netted an amount worth more than 7.15% of the current market cap and their buying is on the rise. The previous two quarters have seen the buying activity increase and the selling activity decrease, which is a factor we see driving share prices higher. As it is, the institutions own more than 65%of the company making it a very tightly held issue. Among the company’s top holders is Vanguard with more than 5.3% of the stock, and the top 3 holders own more than 15% of the stock.
Movado Group Builds On 2021 Momentum
Movado Group has been working hard over the past several years to build out its omnichannel presence and DTC sales. Those efforts created some strong momentum in the wake of the pandemic and it is still carrying the business forward. The Q1 revenue came in at $163.4 million which is seasonally down as expected by up 21.2% versus last year. Last year, sales were up nearly 100% due to the easy comp to 2020 but two-year strength is present as well. The company’s revenue is up 11.4% in the two-year stack on strength in both operating regions, wholesales to retailers, and DTC sales.
The margins are where the results become really impressive. The company’s shift to DTC helped to drive channel and mix shifts that resulted in a 420 basis point improvement in the gross margin. This gain was compounded by a decrease in SG&A as a percentage of revenue as well as a decrease in operating expenses. On the bottom line, the GAAP income of $0.79 per share rose nearly 98% and the adjusted EPS by about 90% due to the revenue and margin gains. The adjusted EPS, notably, beat the Insidertrades.com consensus estimate by $0.36 or 7800 basis points. If you are looking for earnings strength in a retailer, especially a discretionary retailer, this is it.
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And the guidance was also impressive. The company upped its targets for both revenue and earnings with revenue expected in a range of $780 to $800 million compared to the Insidertrades.com consensus of $789. On the bottom line, the company is expecting the operating margin to expand roughly 65 basis points relative to Q1 and drive operating income of $127.50 or up 8.5% from last year.
Movado Group Is A Deep-Value Dividend Grower
Movado Group suspended its dividend during the pandemic but let's be fair. Many companies suspended their dividends to preserve capital and it was a good idea. Since then, Movado has reinstated the dividend, raised it back to the pre-pandemic level, and then raised it again due to the sound balance sheet and earnings power. The stock is yielding about 4.35% at this time and it is a safe payout and cheap at only 7.8X earnings. Based on the low 21% payout ratio and 14% distribution CAGR, we think the next increase could be substantial as well.
Companies in This Article:
|Company||Current Price||Price Change||Dividend Yield||P/E Ratio||Consensus Rating||Consensus Price Target|
|Movado Group (MOV)||$35.95||-1.2%||3.89%||8.42||N/A||N/A|