Movado (MOV)

Luxury watch company Movado (NYSE:MOV) announced better-than-expected revenue in Q4 CY2025, with sales up 9.7% year on year to $191.6 million. Its non-GAAP profit of $0.57 per share was 5.6% above analysts’ consensus estimates.

Company Overview

With its watches displayed in 20 museums around the world, Movado (NYSE:MOV) is a watchmaking company with a portfolio of watch brands and accessories.

The Consumer Discretionary sector, by definition, is made up of companies selling non-essential goods and services. When economic conditions deteriorate or tastes shift, consumers can easily cut back or eliminate these purchases. For long-term investors with five-year holding periods, this creates a structural challenge: the sector is inherently hit-driven, with low switching costs and fickle customers. As a result, only a handful of companies can reliably grow demand and compound earnings over long periods, which is why our bar is high and High Quality ratings are rare.

Apparel and accessories companies design, brand, and distribute clothing, handbags, jewelry, and related lifestyle products, often spanning multiple price tiers. Tailwinds include premiumization trends (consumers trading up for perceived quality), international expansion into emerging markets, and growing digital commerce penetration. However, these businesses face headwinds from highly cyclical demand, intense promotional environments, and counterfeit competition undermining brand equity. Tariff volatility and sourcing concentration in a handful of countries add risk. Additionally, rapidly changing fashion cycles and the rise of ultra-fast-fashion digital competitors compress product life cycles and make demand forecasting exceptionally difficult.

Movado’s primary competitors include Omega (owned by Swatch SWX:UHR), Fossil Group (NASDAQ:FOSL), Citizen Watch (TYO:7762), TAG Heuer (owned by LVMH Moët Hennessy Louis Vuitton Euronext:MC), and private company Rolex.

A company’s long-term performance is an indicator of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Movado grew its sales at a weak 5.8% compounded annual growth rate. This fell short of our benchmark for the consumer discretionary sector and is a poor baseline for our analysis.

Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. Movado’s recent performance shows its demand has slowed as its revenue was flat over the last two years.

This quarter, Movado reported year-on-year revenue growth of 9.7%, and its $191.6 million of revenue exceeded Wall Street’s estimates by 5.3%.

Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months. This projection doesn't excite us and implies its newer products and services will not accelerate its top-line performance yet.

Movado’s operating margin has risen over the last 12 months and averaged 3.6% over the last two years. The company’s higher efficiency is a breath of fresh air, but its suboptimal cost structure means it still sports inadequate profitability for a consumer discretionary business.

In Q4, Movado generated an operating margin profit margin of 7.2%, up 4.4 percentage points year on year. This increase was a welcome development and shows it was more efficient.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Movado’s EPS grew at 7.9% compounded annual growth rate over the last five years. This performance was better than its revenue growth but doesn’t tell us much about its business quality because its operating margin improvement was less than peers.

In Q4, Movado reported adjusted EPS of $0.57, down from $1.12 in the same quarter last year. Despite falling year on year, this print beat analysts’ estimates by 5.6%. Over the next 12 months, Wall Street expects Movado’s full-year EPS of $1.33 to grow 15.8%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Movado has shown poor cash profitability relative to peers over the last two years, giving the company fewer opportunities to return capital to shareholders. Its free cash flow margin averaged 3.3%, below what we’d expect for a consumer discretionary business.

Movado’s free cash flow clocked in at $55.66 million in Q4, equivalent to a 29.1% margin. This result was good as its margin was 7.6 percentage points higher than in the same quarter last year, but we wouldn’t put too much weight on the short term because investment needs can be seasonal, causing temporary swings. Long-term trends carry greater meaning.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Movado historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 18.2%, somewhat low compared to the best consumer discretionary companies that consistently pump out 25%+.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Movado’s ROIC has unfortunately decreased significantly. Paired with its already low returns, these declines suggest its profitable growth opportunities are few and far between.

Companies with more cash than debt have lower bankruptcy risk.

Movado is a profitable, well-capitalized company with $230.5 million of cash and $78.67 million of debt on its balance sheet. This $151.9 million net cash position is 29.8% of its market cap and gives it the freedom to borrow money, return capital to shareholders, or invest in growth initiatives. Leverage is not an issue here.

We enjoyed seeing Movado beat analysts’ revenue expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. Overall, this print had some key positives. The stock remained flat at $23.05 immediately after reporting.

Updated: March 19, 2026 at 6:58 AM EDT

When considering an investment in Movado, investors should account for its valuation and business qualities as well as what’s happened in the latest quarter.

Movado falls short of our quality standards. On top of that, Movado’s weak EPS growth over the last five years shows it’s failed to produce meaningful profits for shareholders, and its relatively low ROIC suggests management has struggled to find compelling investment opportunities.

Movado’s P/E ratio based on the next 12 months is 15x. While this valuation is fair, the upside isn’t great compared to the potential downside. There are better investments elsewhere.

Wall Street analysts have a consensus one-year price target of $30.75 on the company (compared to the current share price of $23.05).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.