Shares of Fossil (FOSL) used to be too high, now they have come down. The stock looks tempting here, but there’s uncertainty.
One Year Chart
Here’s FOSL’s one-year chart. I love the 13 P/E. This stock was $130 earlier in the year and had a P/E of 24. That was too high. Now at 13 times earnings the stock is a real bargain.
The problem is earnings estimates are coming down. You can see this on the Earnings Table. Estimates have been reduced four consecutive quarters now. The stock had been doing a good job shaking off the bad news but god hammered in May along with many other stocks that lowered guidance.
Fair Value
Right now this stock is worth 16 times earnings to me, that makes it undervalued — but the stock needs to be undervalued because of the uncertainty that estimates will continue to erode.
Sharek’s Take
I like this stock and should be buying it now, but I’m scared estimates will continue to come down. I’ll keep FOSL on the radar for now.
View the Ten-Year Chart here.View the Earnigns Table here.
