The University of Texas at Dallas. Analyst Profile. Currently, MBA (Finance) student _at_ UTD ... References. Yahoo Finance - http://finance.yahoo.com/q/pr?s=FOSL ... – PowerPoint PPT presentation
IT Consultant _at_Valtech (7 years experience in IT)
Background
MS in Computer Science _at_Texas AM
BE in Computer Engineering _at_Bombay University
3 Company profile
Fossil is headquartered in Richardson, Texas and founded in 1984.
Small Cap Company in the Consumer Goods Sector.
Engages in the design, development, marketing, and distribution of fashion accessories, including apparel, belts, handbags, jewelry, small leather goods, sunglasses, and watches under proprietary and licensed brand names worldwide.
Well known Brand.
200 company owned and operated retail stores.
Focus on higher-priced watches and handbags.
Strong international presence (50 international sales)
Internationally Diversified, Sales growing overseas may help counter possible slowdown in US consumer spending.
Long duration of Management Founder has been with the company since beginning, now Chairman of Board. CEO has been with the company since 1988 and the COO since 1985.
9 Investment risks
Slowdown in US consumer spending could hurt Fossil.
New products may not favor with consumers.
Consumers for fashion accessories are known to be fickle.
Foreign currency risk ( mainly to Euro and British Pound ).
Competitors may introduce good alternatives to get market share.
Threat from cheap copies, especially in overseas markets.
10 Valuation
Future Value / Present Value
(1) Current EPS 1.5, Expected Growth 15, Years 5, P/E Expected 22, FV 66
(2) Current EPS 1.5, Expected Growth 19, Years 5, P/E Expected 25, FV 89
Now with a discount rate 14, we get Buy 35 - 46 for the two scenarios above. We will consider the lower price range for the Buy price.