Intrinsic value of Movado Group - MOV

Previous Close

$31.20

  Intrinsic Value

$48.73

stock screener

  Rating & Target

str. buy

+56%

Previous close

$31.20

 
Intrinsic value

$48.73

 
Up/down potential

+56%

 
Rating

str. buy

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

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.

Please visit our new site that uses elements of artificial intelligence for stock valuation: artificial intelligence value of Movado Group (MOV) stock.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   2018
   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

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -7.06
  6.10
  5.99
  5.89
  5.80
  5.72
  5.65
  5.58
  5.53
  5.47
  5.43
  5.38
  5.35
  5.31
  5.28
  5.25
  5.23
  5.20
  5.18
  5.17
  5.15
  5.13
  5.12
  5.11
  5.10
  5.09
  5.08
  5.07
  5.06
  5.06
  5.05
Revenue, $m
  553
  587
  622
  659
  697
  737
  778
  822
  867
  915
  964
  1,016
  1,070
  1,127
  1,187
  1,249
  1,314
  1,383
  1,454
  1,530
  1,608
  1,691
  1,777
  1,868
  1,963
  2,063
  2,168
  2,278
  2,393
  2,514
  2,641
Variable operating expenses, $m
 
  363
  384
  407
  431
  455
  481
  508
  536
  565
  596
  628
  661
  697
  733
  772
  812
  855
  899
  945
  994
  1,045
  1,098
  1,155
  1,213
  1,275
  1,340
  1,408
  1,479
  1,554
  1,632
Fixed operating expenses, $m
 
  165
  169
  173
  178
  182
  187
  191
  196
  201
  206
  211
  217
  222
  227
  233
  239
  245
  251
  257
  264
  270
  277
  284
  291
  298
  306
  314
  321
  329
  338
Total operating expenses, $m
  499
  528
  553
  580
  609
  637
  668
  699
  732
  766
  802
  839
  878
  919
  960
  1,005
  1,051
  1,100
  1,150
  1,202
  1,258
  1,315
  1,375
  1,439
  1,504
  1,573
  1,646
  1,722
  1,800
  1,883
  1,970
Operating income, $m
  54
  59
  68
  78
  88
  99
  111
  122
  135
  148
  162
  177
  192
  209
  226
  244
  263
  283
  304
  327
  351
  375
  402
  430
  459
  490
  522
  557
  593
  631
  671
EBITDA, $m
  66
  67
  77
  87
  98
  109
  121
  133
  147
  160
  175
  190
  206
  224
  242
  260
  280
  301
  324
  347
  372
  398
  425
  454
  485
  517
  551
  587
  624
  664
  706
Interest expense (income), $m
  1
  1
  1
  1
  2
  2
  2
  3
  3
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
Earnings before tax, $m
  51
  58
  67
  77
  87
  97
  108
  120
  132
  145
  158
  173
  188
  204
  220
  238
  257
  276
  297
  319
  342
  366
  392
  419
  447
  477
  509
  543
  578
  615
  654
Tax expense, $m
  16
  16
  18
  21
  23
  26
  29
  32
  36
  39
  43
  47
  51
  55
  59
  64
  69
  75
  80
  86
  92
  99
  106
  113
  121
  129
  137
  146
  156
  166
  177
Net income, $m
  35
  43
  49
  56
  63
  71
  79
  87
  96
  106
  116
  126
  137
  149
  161
  174
  187
  202
  217
  233
  249
  267
  286
  306
  326
  348
  372
  396
  422
  449
  478

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  256
  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
  608
  373
  396
  419
  443
  469
  495
  523
  552
  582
  614
  647
  681
  718
  755
  795
  837
  880
  926
  974
  1,024
  1,076
  1,131
  1,189
  1,250
  1,313
  1,380
  1,450
  1,523
  1,601
  1,681
Adjusted assets (=assets-cash), $m
  352
  373
  396
  419
  443
  469
  495
  523
  552
  582
  614
  647
  681
  718
  755
  795
  837
  880
  926
  974
  1,024
  1,076
  1,131
  1,189
  1,250
  1,313
  1,380
  1,450
  1,523
  1,601
  1,681
Revenue / Adjusted assets
  1.571
  1.574
  1.571
  1.573
  1.573
  1.571
  1.572
  1.572
  1.571
  1.572
  1.570
  1.570
  1.571
  1.570
  1.572
  1.571
  1.570
  1.572
  1.570
  1.571
  1.570
  1.572
  1.571
  1.571
  1.570
  1.571
  1.571
  1.571
  1.571
  1.570
  1.571
Average production assets, $m
  37
  39
  41
  43
  46
  49
  51
  54
  57
  60
  64
  67
  71
  74
  78
  82
  87
  91
  96
  101
  106
  112
  117
  123
  130
  136
  143
  150
  158
  166
  174
Working capital, $m
  434
  194
  206
  218
  231
  244
  258
  272
  287
  303
  319
  336
  354
  373
  393
  413
  435
  458
  481
  506
  532
  560
  588
  618
  650
  683
  718
  754
  792
  832
  874
Total debt, $m
  30
  33
  41
  49
  58
  68
  77
  87
  98
  109
  121
  133
  145
  159
  172
  187
  202
  218
  235
  252
  271
  290
  310
  331
  353
  377
  401
  427
  454
  482
  511
Total liabilities, $m
  134
  137
  145
  153
  162
  172
  181
  191
  202
  213
  225
  237
  249
  263
  276
  291
  306
  322
  339
  356
  375
  394
  414
  435
  457
  481
  505
  531
  558
  586
  615
Total equity, $m
  474
  237
  251
  266
  281
  297
  314
  332
  350
  369
  389
  410
  432
  455
  479
  504
  530
  558
  587
  617
  649
  682
  717
  754
  792
  833
  875
  919
  966
  1,015
  1,066
Total liabilities and equity, $m
  608
  374
  396
  419
  443
  469
  495
  523
  552
  582
  614
  647
  681
  718
  755
  795
  836
  880
  926
  973
  1,024
  1,076
  1,131
  1,189
  1,249
  1,314
  1,380
  1,450
  1,524
  1,601
  1,681
Debt-to-equity ratio
  0.063
  0.140
  0.160
  0.190
  0.210
  0.230
  0.250
  0.260
  0.280
  0.300
  0.310
  0.320
  0.340
  0.350
  0.360
  0.370
  0.380
  0.390
  0.400
  0.410
  0.420
  0.420
  0.430
  0.440
  0.450
  0.450
  0.460
  0.460
  0.470
  0.470
  0.480
Adjusted equity ratio
  0.619
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  35
  43
  49
  56
  63
  71
  79
  87
  96
  106
  116
  126
  137
  149
  161
  174
  187
  202
  217
  233
  249
  267
  286
  306
  326
  348
  372
  396
  422
  449
  478
Depreciation, amort., depletion, $m
  12
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27
  29
  30
  32
  33
  35
Funds from operations, $m
  60
  50
  57
  65
  72
  81
  89
  98
  108
  118
  128
  139
  151
  163
  176
  190
  205
  220
  236
  253
  271
  290
  309
  330
  352
  376
  400
  426
  453
  482
  513
Change in working capital, $m
  2
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  29
  30
  32
  33
  35
  36
  38
  40
  42
Cash from operations, $m
  58
  39
  46
  53
  60
  67
  75
  84
  93
  102
  112
  122
  133
  145
  157
  170
  183
  197
  212
  228
  245
  262
  281
  300
  321
  343
  366
  390
  415
  442
  471
Maintenance CAPEX, $m
  0
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -29
  -30
  -32
  -33
New CAPEX, $m
  -6
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
Cash from investing activities, $m
  -8
  -9
  -10
  -10
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -20
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -31
  -33
  -34
  -36
  -38
  -40
  -41
Free cash flow, $m
  50
  30
  36
  42
  49
  56
  63
  71
  79
  88
  97
  106
  116
  127
  138
  150
  162
  175
  189
  204
  219
  235
  253
  271
  290
  310
  331
  354
  378
  403
  429
Issuance/(repayment) of debt, $m
  -10
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
Issuance/(repurchase) of shares, $m
  -5
  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  
  -16
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
Total cash flow (excl. dividends), $m
  40
  37
  44
  50
  58
  65
  73
  81
  90
  99
  108
  118
  129
  140
  152
  164
  177
  191
  206
  221
  238
  255
  273
  292
  312
  333
  356
  380
  404
  431
  459
Retained Cash Flow (-), $m
  -33
  -14
  -14
  -15
  -15
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -30
  -32
  -33
  -35
  -37
  -38
  -40
  -42
  -44
  -47
  -49
  -51
Prev. year cash balance distribution, $m
 
  251
  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
 
  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 available for distribution, $m
 
  274
  30
  36
  42
  49
  56
  63
  71
  79
  88
  97
  107
  117
  128
  139
  151
  164
  177
  191
  206
  221
  238
  255
  274
  293
  314
  335
  358
  382
  407
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
 
  263
  27
  31
  35
  38
  41
  43
  44
  46
  46
  46
  46
  45
  43
  41
  38
  36
  33
  29
  26
  23
  20
  17
  14
  11
  9
  7
  6
  4
  3
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
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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 20.5
Price to Sales 1.3
Price to Book 1.5
Price to Tangible Book
Price to Cash Flow 12.3
Price to Free Cash Flow 13.8
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 $553 million for the last fiscal year's total revenue generated by Movado Group. The default revenue input number comes from 2017 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 6.1% 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 61.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $161 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 3.5% 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%.

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 6.6%.

Life of production assets of 3 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 33.1%. 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 - $474 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 22.905 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 $0.7 billion.

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COMPANY NEWS

▶ 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]
▶ What's Doing Best in New Portfolio? Take a Guess   [Aug-31-17 12:00PM  TheStreet.com]
▶ Company News for August 30, 2017   [10:30AM  Zacks]
▶ Movado posts 2Q profit   [10:04PM  Associated Press]
▶ Movado Group Acquires Olivia Burton   [06:00AM  Business Wire]
▶ Movado Group, Inc. Earnings Fall Despite Cost Cuts   [May-26-17 08:21AM  Motley Fool]
▶ Movado reports 1Q loss   [May-25-17 07:04AM  Associated Press]
▶ Movado Group, Inc.'s Earnings Sink as Retailers Struggle   [Mar-21-17 03:43PM  Motley Fool]
▶ Stocks Lower as Crude Slump Weighs on Energy Sector   [Mar-20-17 02:58PM  TheStreet.com]
Financial statements of MOV
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