FMA SMIF Presentation

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FMA SMIF Presentation

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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

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Title: FMA SMIF Presentation


1
FMASMIF Presentation
  • Analyst Report
  • Fossil Inc. (FOSL)
  • By
  • Adib Motiwala
  • adib.motiwala_at_gmail.com
  • MBA Student, UTD
  • Feb 15, 2008

2
Analyst Profile
  • Currently,
  • MBA (Finance) student _at_ UTD
  • 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)
  • Current Price 34.775 ( Feb 14, 2008)

4
Competitors
  • Guess? Inc. (GES)
  • Coach Inc.(COH)
  • Movado Group Inc.(MOV)

5
Financials
  • Key ratios
  • Forward P/E 17
  • P/E 5 year range (12.5 39.9)
  • Price / Sales 1.84
  • Price / Book 3.54
  • Price / Cash flow 18.3
  • ROA 10
  • ROE 16
  • ROC 15
  • Earnings growth rate (2007) 48

6
Growth Rates
7
Breakdown of Sales Segments
8
Investment Merits
  • Strong balance sheet (180M cash)
  • Large insider holding 36
  • ROE 15, ROA 10, ROC 15
  • Positive Free Cash Flow (FCF)
  • 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.
  • Recommend Buy around 35

11
Method of Comparables
12
References
  • Yahoo Finance - http//finance.yahoo.com/q/pr?sFO
    SL
  • MSN Money - http//moneycentral.msn.com/investor/r
    esearch/newsnap.asp?SymbolFOSL
  • Google Finance - http//finance.google.com/finance
    ?qfosl
  • FV Calculator - http//pencils2.com/fvpvcalculator
    .html
  • Fossil.com http//www.fossil.com
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