MOV Stock: High-Yielding Luxury Stock Selling at a Discount
April 4, 2025
Movado Stock Currently Overlooked & Undervalued
The stock market has cycles, and catching the right cycle can lead to massive returns.
Take luxury stocks, for example. When recession fears creep in, these stocks get slammed. Why? Because investors panic and assume no one will buy high-end goods, so they dump their luxury stocks.
Here’s the thing though: when recession fears are creeping in, it’s usually the best time to pay attention to luxury stocks. These stocks aren’t getting hammered because the businesses are bad or because brands have lost their value; they are simply victims of the cycle. And when the cycle turns, they come roaring back big-time.
As investors are starting to get worried about a recession in the U.S. economy and the slowing global economy, there’s one luxury stock that income investors shouldn’t overlook: Movado Group Inc (NYSE:MOV).
This watchmaker might not have the same level of hype as Rolex or Patek Philippe, but there’s a serious case to be made for MOV stock being undervalued and overlooked.
What Does Movado Group Do?
Headquartered in Paramus, New Jersey, Movado Group designs, sources, markets, and distributes watches in the U.S. and internationally. The company operates in two segments: Watch and Accessory Brands, and Company Stores.
The company offers its watches under the “Movado,” “Concord,” “Ebel,” “Olivia Burton,” and “MVMT” brands. It also offers licensed brands such as “Coach,” “Tommy Hilfiger,” “HUGO BOSS,” “Lacoste,” and “Calvin Klein.”
Furthermore, Movado Group designs, sources, markets, and distributes jewelry and other accessories and provides after-sales and shipping services.
Movado’s customers include jewelry store chains, department stores, independent regional jewelers, a network of independent distributors, online marketplaces, licensors’ retail stores, and third-party e-commerce retailers. The company also sells directly to consumers through its e-commerce platforms. (Source: “Profile,” Yahoo! Finance, last accessed April 1, 2025.)
Movado Group’s Financials Look Great
As mentioned earlier, luxury stocks often face short-term volatility, especially if the risk of an economic slowdown is brewing. Consumers tend to cut back on discretionary spending, and luxury brands bear the brunt of this shift. However, companies with strong fundamentals and great brands tend to emerge stronger over time. Movado is that kind of company.
In its latest earnings report for the third quarter of fiscal year 2025, ended on October 31, 2024, Movado posted net sales of $182.7 million and adjusted diluted earnings per share of $0.37. Its revenues and profitability are down a little, but it remains a fundamentally strong company.
Regarding what’s ahead, and how the company is planning to overcome the near-term headwinds, Efraim Grinberg, Movado’s chairman and chief executive officer, said, “As we look ahead, our highest priority is to meaningfully improve profitability. We are finalizing plans for fiscal 2026 that focus on efficient brand-building initiatives, key growth opportunities such as jewelry and emerging markets, and a more streamlined expense base.”
Grinberg added “We continue to enjoy a strong financial position, concluding the quarter with $181.5 million in cash and no debt, positioning us well to execute our strategic plans moving forward. We are confident in our ability to deliver sustained profitable growth and increased value for our shareholders.” (Source: “Movado Group, Inc. Announces Third Quarter Results,” Movado Group Inc, December 5, 2024.)
Given what management is saying, MOV stock looks like a decent deal at the current price.
MOV Stock: A Solid Pick for Income Investors?
One of the most attractive aspects of MOV stock is its dividend. Movado has a history of keeping its shareholders happen through dividends, and this makes it a solid pick for income-focused investors.
The company has consistently paid dividends over the years, which shows management’s confidence in its cash flow stability. There have been a few increases as well. For instance, in 2021, quarterly dividend payments were $0.193 per share. Now its $0.35 per share. This represents an increase of 81%!
At the current price, MOV stock has an inflation-crushing dividend yield of 8.3%.
Now the important question: are its dividends safe?
Movado has paid dividends even in the toughest of economic environments. Moreover, the company has a decent balance sheet and no debt. This makes the dividend safe. The company did halt its dividends in 2020, but don’t forget that this was an extraordinary time.
Chart Courtesy of StockCharts.com
The Lowdown on MOV Stock
MOV stock offers a unique opportunity in the luxury stock space. While there are short-term headwinds and they have caused investors to panic a little, Movado’s solid fundamentals, brands, and commitment to shareholder value make MOV stock a compelling opportunity for income investors.
This company is loved by institutional investors. As per the most recent data, 92.94% of all outstanding shares of MOV stock are held by institutional investors. The top three institutions, BlackRock, Inc., Royce & Associates, LP, and Dimensional Fund Advisors LP hold 4.02 million shares of MOV stock. (Source: “Holders,” Yahoo! Finance, last accessed April 1, 2025.)
This means that the top three institutional investors in MOV stock generate over $1.4 million in income through dividends.
