Movado’s Turnaround Gains Momentum

Key Points

• Movado posted two consecutive quarters of earnings beats, driving shares up roughly 60% year-to-date amid a broader tariff-related turnaround.
• Wall Street analysts rate Movado a Strong Buy, with an average price target of $40 implying about 22% upside from current levels.
• Investors should weigh the stock's sharp run-up and temporary tariff-refund gains against risks from competitors and smartwatches affecting future margins.

Investors know Movado Group NYSE: MOV as a watch company. Analysts know it as a Strong Buy.

The company has spent the past year transforming from a tariff-battered lesson into a compelling turnaround story. It is riding two consecutive quarters of earnings beats, a debt-free balance sheet, a freshly raised dividend, and a shift in how younger consumers view traditional watches.

Investors weighing whether to get in now should understand both how far the stock has already climbed and whether this year's margin improvement is temporary or structural.

Movado Gains Momentum

For much of fiscal year 2025 and 2026, Movado absorbed roughly $10 million in added cost of goods sold tied to tariffs on imported watches. Net income came in at $26.6 million, or $1.17 per diluted share, in fiscal 2025.

Knowing that makes the reversal even more striking. Starting with this year’s fiscal first quarter, Movado reported adjusted earnings per share (EPS) came in at 32 cents against a Wall Street estimate of less than 10 cents.

Shares jumped roughly 45% during the days before and after the release, helping fuel a roughly 60% increase year-to-date.

The second quarter was more of the same. Results reported Aug. 26 again blew past expectations, with net sales rising 4.9% to $169.8 million, ahead of the $164.2 million analysts had modeled.

Adjusted EPS of 54 cents compared with 23 cents a year ago and topped the 35-cent consensus. Net income more than quadrupled to $12.3 million from $3 million a year earlier, and adjusted operating income rose to $15.1 million from $7 million.

Refunds Boost Second-Quarter Results

Some of that improvement came with a footnote. Roughly 11 cents of the 54 cents in adjusted EPS came from a one-time benefit, as Movado collected $3.2 million of tariff refunds in the quarter.

Even stripping that out, gross margin still expanded 340 basis points to 57.5%, and adjusted earnings per share still grew roughly 87% year-over-year. The company ended the quarter with $211.6 million in cash and no fixed debt.

Management is rewarding shareholders for the recovery. The board raised the quarterly dividend to 40 cents a share from 35 cents earlier this year, pushing the yield to an attractive 4.8%. A modest share buyback is also underway.

Younger Consumers Return to Traditional Watches

Behind the numbers is apparently a genuine consumer shift. Chief executive Efraim Grinberg told analysts that younger consumers are coming back to traditional watches, collecting multiple pieces and treating them as fashion statements.

Movado is leaning into that with new smaller-cased designs, a 145th-anniversary marketing push featuring ambassadors such as Julianne Moore and Tyrese Haliburton, and continued Gen Z strength at Coach.

The company is also expanding its partnership with Tapestry NYSE: TPR to launch Kate Spade watches starting next fiscal year, adding another lever to a licensing roster that already includes Tommy Hilfiger, Lacoste, Calvin Klein and HUGO BOSS.

Analysts Turn Bullish on Movado

Analyst sentiment has largely caught up with the results, with Wall Street consensus labeling the company a Strong Buy. With four analysts covering the stock, two have slated it a Buy while the other two regard it as a Strong Buy.

The average 12-month price target is $40 per share, implying a roughly 22% upside from its current value. The highest price target is $45 per share and the lowest is $35.

Margin Pressures and Competition Pose Risks

There are reasons for some caution, however.

The most important is that much of the recent gross-margin windfall is temporary. Management has guided top-line growth in the mid-single-digit range for the second half of this fiscal year, while gross margin is expected to come in between 55% and 56%, below the second quarter's 59.4%, partly adjusted for the changing tariff environment.

Movado also sits in a crowded field. Fossil Group NASDAQ: FOSL has struggled for years in the same fashion-watch category, demonstrating how quickly momentum can reverse. Larger accessories players such as Capri Holdings NYSE: CPRI and Ralph Lauren NYSE: RL also compete for similar wrist space and discretionary dollars.

In addition, smartwatches from Apple NASDAQ: AAPL and Garmin NYSE: GRMN remain a longer-term threat to analog demand, even if Movado's own data suggests younger buyers are rediscovering mechanical and quartz pieces as style statements.

Investors Should Weigh the Recent Run

Investors looking to ride the analysts’ recommendation should keep in mind how far the stock has come and the recent pullback that’s occurred. That kind of run for a company with a market capitalization around $740 million might have already priced in a big chunk of the good news.

But with a nearly 5% dividend yield, double-digit earnings growth, and a clean balance sheet, the Movado story is compelling. If generational tastes continue to change in the company’s direction and gross margin normalizes as guided, the time might be right to synchronize a portfolio with this watchmaker.