Why Fossil Shares Flew

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of accessories specialist Fossil soared 19% today after its quarterly results and outlook topped Wall Street expectations.

So what: The stock plunged yesterday on concerns about the quarter, but the big Q2 beat -- EPS of $1.15 on revenue of $706.2 million versus the consensus of $0.93 and $692.1 million -- is quickly putting those worries to rest. In fact, operating margins for the quarter increased 130 basis points to 15.1%, suggesting its competitive position and pricing power are strengthening.


Management now sees full-year EPS of $6.15-$6.35, versus its prior outlook of $6.00-$6.26 and Wall Street's view of $6.15. "At the halfway mark of the year, we remain confident in our outlook and excited about our future," said CEO Kosta Kartsotis. "[O]ur solid capital structure and diversified business model provides us with an incredible platform to continue to generate strong cash flows to support our future growth and continue to deliver outstanding returns for our shareholders."

With the stock now more than 60% from its 52-week lows and trading at a forward P/E of 20, however, I'd wait for some of the excitement to fade before buying into that growth.

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The article Why Fossil Shares Flew originally appeared on Fool.com.

Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool recommends Fossil. The Motley Fool owns shares of Fossil. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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