Movado Group, Inc. (Movado Group) designs, sources, markets and distributes watches. Its quality watches are sold in almost every price category comprising the watch industry. Its portfolio of brands includes Movado, Ebel, Concord, ESQ, Coach Watches, HUGO BOSS Watches, Juicy Couture Watches and Tommy Hilfiger Watches and Lacoste Watches. The Company also designs, develops and markets Movado-branded jewelry, which it retails in its Movado Boutiques.
Movado which is based out of Paramus, NJ is a small company with a market capitalization of $265 million. Movado stock reached a high of $35 a share in July 2007. The stock reached as low as $4.65 a share in March 2009 before rallying to its current level of $10.78 a share. The stock which was dirt cheap at its low in March 2009, is still undervalued at its current level based on various quantitative and qualitative factors.
The stock which has faced short term difficulties due to the severe recession was pushed down to irrationally low levels. Investors are overreacting due to Movado’s severe earnings decline and its suspension of its dividend for the foreseeable future. The company which has lost money the past several quarters is expected to lose money for the next several quarters. The stock is also undervalued because it is small and not covered by many analysts (as is the case with many small cap stocks)
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One of the reasons Movado has a good future is that its balance sheet is as good shape as it has ever been. It is hard to find a company with a balance sheet as strong as Movado’s. The company has more cash and receivables than total debt. Its total assets are almost five times total debt. Furthermore the company has very little long term debt.