Fossil Earnings: We are CRUSHING It

Fossil Inc. (NASDAQ:FOSL) reported net income above Wall Street’s expectations for the second quarter. Fossil is a global design, marketing and distribution company that specializes in consumer fashion accessories.

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Fossil Inc. Earnings Cheat Sheet

Results: Net income for Fossil Inc. rose to $57.3 million (92 cents per share) vs. $51.4 million (80 cents per share) in the same quarter a year earlier. This marks a rise of 11.6% from the year-earlier quarter.

Revenue: Rose 14.3% to $636.1 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Fossil Inc. reported adjusted net income of 93 cents per share. By that measure, the company beat the mean estimate of 79 cents per share. It beat the average revenue estimate of $617.6 million.

Quoting Management: “Our better-than-expected Second Quarter performance resulted in double-digit increases in sales and earnings, representing another record performance for the Company and highlighted several noteworthy accomplishments toward our near and long term goals,” stated Mike Kovar, Executive Vice President and Chief Financial Officer. “Across each of our geographical segments we experienced acceleration in wholesale sales growth in comparison to our first quarter of 2012. Constant dollar sales of watches worldwide increased by 23.2% and included contributions from almost all major brands, including SKAGEN. In Asia, we saw constant dollar sales grow by 27.2% demonstrating the success of our investments in this opportunity and the heightened consumer demand for FOSSIL and our multi-brand watch portfolio. We believe we are well positioned in the second half of the year to execute our growth strategies and capitalize on our owned infrastructure and exceptional talent to further advance our market penetration for fashion watches and accessories worldwide.”

Key Stats:

The company has now seen its net income rise for three quarters in a row. In the first quarter, net income rose 4.2% and in the fourth quarter of the last fiscal year, the figure rose 22%.

Revenue has increased for four consecutive quarters. Revenue increased 9.8% to $589.5 million in the first quarter. The figure rose 18.5% in the fourth quarter of the last fiscal year from the year earlier and climbed 22.7% in the third quarter of the last fiscal year from the year-ago quarter.

The company beat estimates last quarter after being in line with expectations in the first quarter with net income of 93 cents per share.

The company’s cost of sales rose to 44% of revenue, just 14.3% from the year-earlier quarter.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the third quarter has moved down from $1.45 a share to $1.38 over the last ninety days. The average estimate for the fiscal year is $5.31 per share, down from $5.57 ninety days ago.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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