Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of fashionista Fossil (NAS: FOSL) were looking very unstylish today as they lost as much as 26% in intraday trading.

So what: After the drop of the past couple weeks and, in particular, yesterday's plunge absolutely shattered Mr. Market's nerves, investors have little patience for anything that smacks of disappointment. For the second quarter, Fossil's results looked pretty darn impressive. Revenue of $556.7 million was up 35% from last year while a jump in the tax rate left earnings per share flat with last year at $0.80. Both revenue and per-share profit easily topped Wall Street's estimates.

While that may not sound like much to be disappointed about, the company is expecting that rising costs for labor and materials, as well as a tougher economic picture, will hurt results in the quarters ahead. As a result, management set full-year EPS guidance at $4.44 to $4.50. Wall Street was hoping for $4.61.

Now what: In focusing on management's view versus Wall Street's, investors shouldn't overlook the fact that the midpoint of management's guidance still calls for 19% profit growth.
Trading at 17 times the midpoint of management's guidance, Fossil's stock doesn't have the cheapest multiple out there, but the company is a strong grower and the market has significantly cut the price on shares -- in less than a month, Fossil's stock has fallen more than 40%. For those that had Fossil on their watchlist, now could be a great time to pull out the ol' valuation model and run the numbers again.

Want to keep up to date on Fossil? Add it to your watchlist.



At the time this article was published The Motley Fool owns shares of Fossil. Motley Fool newsletter services have recommended buying shares of Fossil. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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