an analysis of Movado (MOV)

Movado Group designs, sources, markets and distributes fine watches. Its portfolio of brands is currently comprised of Coach® Watches, Concord®, Ebel®, ESQ® Movado, Scuderia Ferrari® Watches, HUGO BOSS® Watches, Juicy Couture® Watches, Lacoste® Watches, Movado®, and Tommy Hilfiger® Watches. The Company is a leader in the design, development, marketing and distribution of watch brands sold in almost every major category comprising the watch industry.The company markets its watches in two segment the US and international and this is where most of the confusion starts or should I say value.You see most of the Cash made from international segment which account for 49% of sales is not repatriated back to the US why simple Movado is trying to avoid the Federal withholding tax hence the cash stays outside the US that also does not include some of the Net operating loss carry forward it has in both the US and International and Movado has a lot of non cash charges on its 10K so the best way to value it is from the cashflow statement why because this is where the money is and the income statement is getting a beating from this non cash charges good for Movado and bad for the IRS so lets see just how much of a value Movado is with 25.8 m shares outstanding and a closing price of 27.25 Movado market cap comes in at 703.05 remember the cash I said about the International segment that is yet to be repatriated back to the US since as per Movado its permanently reinvested for future use in its subsidiaries in the both Asia and Switzerland that cash comes in at 213.7m and thats not inclusive of the cash on balance sheet net of debt of 190.7 adding it all together the cash comes in at 404.4m but we need to also add the Net operating loss carry forward, it has non on the Federal level but it has some at International and State level which comes in at 51.5m so we add it to cash and subtract it from the Market cap to get the enterprise value which comes in at 247.15 now to the cash flow in 2012 cash flow was at a high of 86m then dropped by more than half in 2013 to come in at 38.7m and last year it went up a bit to 54.5 but we need to get free cash flow for the recent year and this comes in at 46.5 that means Movado is selling for 5.3 times free cash flow that explains why it started paying dividends but I would have love it if it went for less than 4 times free cash flow but even now it still undervalued I wonder though what will happen once its start to repatriate retained income from the foreign subsidiaries since with 49% of sale outside US the retained income will still grow at high rate most likely Movado will do another acquisition but thats no problem since it has been conservative in its acquisitions but should it buy financial institution or even worse a steel company that should be a cause for concern but for now its time to scale into Movado. find at valueinvestingkenya.wordpress.com

You don't communicate with anybody in the US so long as you have the financials statements for the last five years, that's all you need also understand the industry you company falls in, and not all companies are built equal.

I will thank you.

Thank you Zizzi, never heard anybody recommend anything from my blog, I think people take what the financial statements portray as the gospel truth,I take everything in investing with a pinch of salt,what I have found out in Kenya is that investing is still at its infancy people who are in wazua and another faceboook group I am in have a very hard time understanding anything I write, and I also have a very hard time understanding how they invest with so little knowledge.
I have been researching and reading about investing for the last 8 years so in 2013 I decided to open a demo account with finviz, 29 stocks later and in 2014 a year after I had opened the account was the time of reckoning and sure enough theory did match up with reality,and made a good return actually I opened a couple of accounts including shortselling portfolio but this got a beating and didn't do very well overall. The one portfolio that actually did very well was one that had the least stock 6 stocks to be exact it was up 150% in nine months. From this I have learned diversification is of less importance now I prefer to hold less than 25 stocks.
As for how to invest in the US its pretty simple all you need is to search for an online broker that takes non US residents, interactive brokers fits the bill here I actually opened an account with them but its not that easy. My plan is to start a hedge fund which I have, not limited by 66 stocks only traded on the NSE,if and when the NSE is overvalued investors have few options. I am opportunistic so long as I can understand the company, I will invest no matter where the stock exchange is located, on the other hand as your capital grows the NSE will become less attractive since the capital needed to invest on the NSE is small so much so that it can't move a pen, a case most pension schemes are currently experiencing more and more.
I really don't have a formula as to how I pick my stocks, most of the time I am looking for out of favor industry's, the 52 week low or anything else that wall street considers below par for investing, then I do my due diligence, to check if investors overreacted, or they are actually right. I have and use gurufocus as one of the screeners and the SEC for financial statements, from this you can make a rational judgement either to invest or pass which happens most of the time.
As for attracting capital this has been the biggest hurdle I have yet to conquer, most people can't believe than you can invest in the US successfully, and the recent recession has almost cast this in stone what they don't know is that this actually the time to invest, Europe is offering one of the best opportunities so is Korea and Japan, I have read a lot about value investing and though net-nets did in the past outperform before the internet era today screening for net-nets is like childs play. After a while researching about value investing you take what fits you and though still grounded by the same fundamental discipline of value investing I have come up with my own way of searching for my investments I call it value hidden in plain sight the net of it all is I am looking where there is an undervaluation and where the wind is on my back the odds are in my favor.