The earnings clock is ticking down as timepiece designer, manufacturer, and retailer Movado (NYSE:MOV) prepares to release second-quarter results tomorrow. A broken watch is only right twice a day, but those keeping watch on Movado may want to consider using any earnings snafus or further market weakness as an opportunity to try the stock on for size. The firm has a number of interesting growth avenues.

What analysts say:

  • Buy, sell, or waffle? Three analysts currently follow Movado; all are bullish on the stock. The Motley Fool CAPS community currently gives the company three stars out of five.
  • Revenues. Analysts are projecting $134.1 million in second-quarter sales, or about 6% more than last year's second-quarter sales amount.
  • Earnings. Analysts expect quarterly earnings of $0.42 per share, a penny less than the $0.43 reported last year.

What management says:
Back when Movado announced first-quarter results, management said it expected fiscal 2008 diluted earnings per share "of approximately $1.72 based on an estimated 25% tax rate," on sales of $550 million-$560 million.

What management does:
Movado has ticked along nicely over the past five years, with double-digit annual increases in sales and more than 20% annual earnings growth over this timeframe. More recently, profitability has improved, pushing net margins beyond 9%.

Margins

01/06

04/06

07/06

10/06

01/07

04/07

Gross

60.8%

60.9%

61.3%

60.6%

60.6%

60.6%

Operating

10.2%

10.4%

10.5%

10.3%

9.8%

9.7%

Net*

5.7%

5.9%

6.4%

7.6%

9.4%

9.3%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Cash flow improved markedly during Movado's most recent fiscal year. Inventory management seem to have improved significantly, after the company took advantage of an opportunity to convert a discontinued product into cash. Time will tell whether the company can keep cash generation high, but its three-pronged growth strategy provides several intriguing directions in which to expand the business.

Movado's operates across the entire watch market spectrum, with products spanning the mass market to luxury and exclusive offerings such as Ebel, Concord, and the namesake brand. It also licenses popular names from Coach (NYSE:COH), Tommy Hilfiger, and Liz Claiborne's (NYSE:LIZ) super-trendy Juicy Couture. The company has also begun eating into profits of low-end competitor Fossil (NASDAQ:FOSL).

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