Intrinsic value of Movado Group - MOV

Previous Close

$51.60

  Intrinsic Value

$22.60

stock screener

  Rating & Target

str. sell

-56%

Previous close

$51.60

 
Intrinsic value

$22.60

 
Up/down potential

-56%

 
Rating

str. sell

We calculate the intrinsic value of MOV stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2018), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 1.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047
   2048

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.80
  3.02
  3.22
  3.40
  3.56
  3.70
  3.83
  3.95
  4.05
  4.15
  4.23
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.63
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.82
  4.84
  4.86
  4.87
  4.88
  4.90
Revenue, $m
  584
  602
  621
  642
  665
  689
  716
  744
  774
  806
  840
  877
  915
  956
  999
  1,044
  1,092
  1,143
  1,196
  1,252
  1,312
  1,374
  1,440
  1,509
  1,582
  1,658
  1,739
  1,824
  1,913
  2,006
Variable operating expenses, $m
  528
  544
  561
  580
  600
  622
  646
  671
  698
  726
  748
  781
  815
  851
  889
  930
  972
  1,017
  1,065
  1,115
  1,168
  1,223
  1,282
  1,343
  1,408
  1,476
  1,548
  1,624
  1,703
  1,786
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  528
  544
  561
  580
  600
  622
  646
  671
  698
  726
  748
  781
  815
  851
  889
  930
  972
  1,017
  1,065
  1,115
  1,168
  1,223
  1,282
  1,343
  1,408
  1,476
  1,548
  1,624
  1,703
  1,786
Operating income, $m
  56
  58
  60
  62
  65
  67
  70
  73
  77
  80
  92
  96
  100
  105
  109
  114
  120
  125
  131
  137
  144
  151
  158
  165
  173
  182
  191
  200
  210
  220
EBITDA, $m
  71
  74
  76
  79
  81
  84
  88
  91
  95
  99
  103
  107
  112
  117
  122
  128
  134
  140
  146
  153
  160
  168
  176
  185
  193
  203
  213
  223
  234
  245
Interest expense (income), $m
  1
  0
  0
  0
  1
  1
  1
  2
  2
  3
  3
  3
  4
  4
  5
  6
  6
  7
  8
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  20
Earnings before tax, $m
  56
  57
  59
  61
  64
  66
  68
  71
  74
  77
  89
  92
  96
  100
  104
  108
  113
  118
  123
  128
  134
  140
  146
  153
  160
  167
  175
  183
  191
  200
Tax expense, $m
  15
  16
  16
  17
  17
  18
  18
  19
  20
  21
  24
  25
  26
  27
  28
  29
  30
  32
  33
  35
  36
  38
  39
  41
  43
  45
  47
  49
  52
  54
Net income, $m
  41
  42
  43
  45
  46
  48
  50
  52
  54
  56
  65
  67
  70
  73
  76
  79
  82
  86
  90
  94
  98
  102
  107
  111
  117
  122
  128
  133
  140
  146

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  546
  562
  580
  600
  621
  644
  669
  695
  724
  754
  786
  819
  855
  893
  933
  976
  1,021
  1,068
  1,118
  1,170
  1,226
  1,284
  1,346
  1,410
  1,478
  1,550
  1,625
  1,704
  1,787
  1,875
Adjusted assets (=assets-cash), $m
  546
  562
  580
  600
  621
  644
  669
  695
  724
  754
  786
  819
  855
  893
  933
  976
  1,021
  1,068
  1,118
  1,170
  1,226
  1,284
  1,346
  1,410
  1,478
  1,550
  1,625
  1,704
  1,787
  1,875
Revenue / Adjusted assets
  1.070
  1.071
  1.071
  1.070
  1.071
  1.070
  1.070
  1.071
  1.069
  1.069
  1.069
  1.071
  1.070
  1.071
  1.071
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.071
  1.070
Average production assets, $m
  74
  76
  79
  82
  84
  88
  91
  94
  98
  102
  107
  111
  116
  121
  127
  133
  139
  145
  152
  159
  167
  174
  183
  192
  201
  211
  221
  232
  243
  255
Working capital, $m
  131
  135
  139
  144
  149
  154
  160
  167
  173
  181
  188
  196
  205
  214
  224
  234
  245
  256
  268
  281
  294
  308
  322
  338
  354
  371
  389
  408
  428
  449
Total debt, $m
  4
  9
  14
  19
  25
  32
  39
  46
  54
  63
  72
  81
  92
  102
  114
  126
  138
  152
  166
  181
  197
  213
  230
  249
  268
  288
  310
  332
  355
  380
Total liabilities, $m
  154
  159
  164
  170
  176
  182
  189
  197
  205
  213
  222
  232
  242
  253
  264
  276
  289
  302
  316
  331
  347
  363
  381
  399
  418
  439
  460
  482
  506
  531
Total equity, $m
  391
  403
  416
  430
  445
  462
  480
  499
  519
  540
  563
  587
  613
  640
  669
  700
  732
  766
  801
  839
  879
  921
  965
  1,011
  1,060
  1,111
  1,165
  1,222
  1,282
  1,344
Total liabilities and equity, $m
  545
  562
  580
  600
  621
  644
  669
  696
  724
  753
  785
  819
  855
  893
  933
  976
  1,021
  1,068
  1,117
  1,170
  1,226
  1,284
  1,346
  1,410
  1,478
  1,550
  1,625
  1,704
  1,788
  1,875
Debt-to-equity ratio
  0.010
  0.020
  0.030
  0.050
  0.060
  0.070
  0.080
  0.090
  0.100
  0.120
  0.130
  0.140
  0.150
  0.160
  0.170
  0.180
  0.190
  0.200
  0.210
  0.220
  0.220
  0.230
  0.240
  0.250
  0.250
  0.260
  0.270
  0.270
  0.280
  0.280
Adjusted equity ratio
  0.717
  0.717
  0.717
  0.717
  0.717
  0.717
  0.717
  0.717
  0.717
  0.717
  0.717
  0.717
  0.717
  0.717
  0.717
  0.717
  0.717
  0.717
  0.717
  0.717
  0.717
  0.717
  0.717
  0.717
  0.717
  0.717
  0.717
  0.717
  0.717
  0.717

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  41
  42
  43
  45
  46
  48
  50
  52
  54
  56
  65
  67
  70
  73
  76
  79
  82
  86
  90
  94
  98
  102
  107
  111
  117
  122
  128
  133
  140
  146
Depreciation, amort., depletion, $m
  16
  16
  16
  16
  17
  17
  17
  18
  18
  19
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  25
Funds from operations, $m
  56
  58
  59
  61
  63
  65
  67
  70
  72
  75
  75
  78
  82
  85
  88
  92
  96
  100
  105
  109
  114
  120
  125
  131
  137
  143
  150
  157
  164
  172
Change in working capital, $m
  4
  4
  4
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
Cash from operations, $m
  53
  54
  55
  56
  58
  60
  61
  63
  65
  68
  68
  70
  73
  76
  79
  82
  85
  89
  93
  97
  101
  106
  110
  115
  120
  126
  132
  138
  144
  151
Maintenance CAPEX, $m
  -7
  -7
  -8
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
New CAPEX, $m
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
Cash from investing activities, $m
  -9
  -9
  -10
  -11
  -11
  -11
  -12
  -13
  -13
  -14
  -14
  -16
  -16
  -17
  -17
  -19
  -19
  -20
  -22
  -22
  -24
  -25
  -25
  -27
  -28
  -30
  -31
  -33
  -34
  -36
Free cash flow, $m
  43
  44
  45
  46
  47
  48
  49
  51
  52
  54
  53
  55
  57
  59
  61
  64
  66
  69
  72
  75
  78
  81
  84
  88
  92
  96
  100
  105
  110
  115
Issuance/(repayment) of debt, $m
  4
  5
  5
  6
  6
  7
  7
  7
  8
  8
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  17
  18
  19
  20
  21
  22
  24
  25
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  4
  5
  5
  6
  6
  7
  7
  7
  8
  8
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  17
  18
  19
  20
  21
  22
  24
  25
Total cash flow (excl. dividends), $m
  47
  49
  50
  51
  53
  55
  56
  58
  60
  62
  62
  65
  67
  70
  73
  76
  79
  82
  86
  89
  93
  97
  102
  106
  111
  116
  122
  127
  133
  139
Retained Cash Flow (-), $m
  -11
  -12
  -13
  -14
  -15
  -16
  -18
  -19
  -20
  -22
  -23
  -24
  -26
  -27
  -29
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -49
  -51
  -54
  -57
  -60
  -63
Prev. year cash balance distribution, $m
  90
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  5
  5
  5
  6
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  16
  17
Cash available for distribution, $m
  126
  37
  37
  37
  38
  38
  39
  39
  40
  41
  39
  40
  41
  43
  44
  45
  47
  48
  50
  52
  54
  56
  58
  60
  62
  65
  68
  70
  73
  77
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  121
  34
  32
  31
  29
  28
  26
  24
  23
  21
  19
  17
  16
  14
  13
  11
  10
  9
  8
  7
  6
  5
  4
  3
  2
  2
  1
  1
  1
  1
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Movado Group, Inc. designs, sources, markets and distributes watches. The Company operates through two segments: Wholesale and Retail. The Wholesale segment includes the design, development, sourcing, marketing and distribution of watches, and after-sales service activities and shipping. It sells all of its brands to jewelry store chains and department stores, as well as independent jewelers. The Retail segment includes its outlet stores. As of January 31, 2017, its subsidiary, Movado Retail Group, Inc., operated 40 outlet stores located in outlet centers across the United States. It divides its business into two geographic locations: the United States operations and International operations. It has international operations in Europe, the Americas, the Middle East and Asia. Its portfolio of brands includes Coach Watches, Concord, Ebel, ESQ Movado, Scuderia Ferrari Watches, HUGO BOSS Watches, Juicy Couture Watches, Lacoste Watches, Movado and Tommy Hilfiger Watches.

FINANCIAL RATIOS  of  Movado Group (MOV)

Valuation Ratios
P/E Ratio 33.8
Price to Sales 2.1
Price to Book 2.5
Price to Tangible Book
Price to Cash Flow 20.4
Price to Free Cash Flow 22.8
Growth Rates
Sales Growth Rate -7.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -33.3%
Cap. Spend. - 3 Yr. Gr. Rate -18.8%
Financial Strength
Quick Ratio 51
Current Ratio 0.4
LT Debt to Equity 5.3%
Total Debt to Equity 6.3%
Interest Coverage 52
Management Effectiveness
Return On Assets 6%
Ret/ On Assets - 3 Yr. Avg. 7.6%
Return On Total Capital 7.1%
Ret/ On T. Cap. - 3 Yr. Avg. 9.2%
Return On Equity 7.7%
Return On Equity - 3 Yr. Avg. 9.5%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 53.3%
Gross Margin - 3 Yr. Avg. 53.2%
EBITDA Margin 11.6%
EBITDA Margin - 3 Yr. Avg. 13.2%
Operating Margin 9.8%
Oper. Margin - 3 Yr. Avg. 11.3%
Pre-Tax Margin 9.2%
Pre-Tax Margin - 3 Yr. Avg. 11%
Net Profit Margin 6.3%
Net Profit Margin - 3 Yr. Avg. 7.6%
Effective Tax Rate 31.4%
Eff/ Tax Rate - 3 Yr. Avg. 30.5%
Payout Ratio 34.3%

MOV stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MOV stock intrinsic value calculation we used $568 million for the last fiscal year's total revenue generated by Movado Group. The default revenue input number comes from 2018 income statement of Movado Group. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our MOV stock valuation model: a) initial revenue growth rate of 2.8% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for MOV is calculated based on our internal credit rating of Movado Group, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Movado Group.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of MOV stock the variable cost ratio is equal to 90.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for MOV stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.5% for Movado Group.

Corporate tax rate of 27% is the nominal tax rate for Movado Group. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the MOV stock is equal to 0.9%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for MOV are equal to 12.7%.

Life of production assets of 10 years is the average useful life of capital assets used in Movado Group operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for MOV is equal to 22.4%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $470 million for Movado Group - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 23 million for Movado Group is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Movado Group at the current share price and the inputted number of shares is $1.2 billion.

RELATED COMPANIES Price Int.Val. Rating
FOSL Fossil Group 25.68 15.38  buy

COMPANY NEWS

▶ Movado to buy MVMT Watches   [Aug-15-18 05:34PM  MarketWatch]
▶ 5 Stocks to Buy on New Analyst Coverage   [Jul-09-18 02:13PM  InvestorPlace]
▶ Why Movado Group, Inc. Stock Popped Today   [01:07PM  Motley Fool]
▶ Movado: Fiscal 1Q Earnings Snapshot   [06:55AM  Associated Press]
▶ Meghan Markle helps gold sales shine   [May-25-18 01:21PM  Yahoo Finance Video]
▶ Bull of the Day: Movado (MOV)   [06:30AM  Zacks]
▶ What Happened in the Stock Market Today   [Mar-29-18 05:28PM  Motley Fool]
▶ Why Movado Group Inc. Stock Popped Today   [01:48PM  Motley Fool]
▶ Movado reports 4Q loss   [07:03AM  Associated Press]
▶ Movado Group Inc to Host Earnings Call   [07:00AM  ACCESSWIRE]
▶ A Look At The Intrinsic Value Of Movado Group Inc (NYSE:MOV)   [Mar-16-18 07:02AM  Simply Wall St.]
▶ Movado Group, Inc. Establishes Digital Center of Excellence   [Mar-07-18 08:30AM  Business Wire]
▶ How Financially Strong Is Movado Group Inc (NYSE:MOV)?   [Mar-06-18 12:11PM  Simply Wall St.]
▶ Benzinga Pro's 5 Stocks To Watch Today   [Feb-14-18 08:10AM  Benzinga]
▶ Tiffany, 3 Other Luxury Retailers No Bargains   [Feb-09-18 08:39AM  Investopedia]
▶ Movado Group, Inc. Boosts Full-Year Outlook   [Nov-21-17 11:30PM  Motley Fool]
▶ What Happened in the Stock Market Today   [05:09PM  Motley Fool]
▶ Movado posts 3Q profit   [06:53AM  Associated Press]
▶ Why Movado Group, Inc. Stock Rose 12.8% in August   [Sep-12-17 10:32AM  Motley Fool]
Follow us on:   twitter   twitter   twitter   twitter

ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.