Many investors may argue that time is running out Watches from Switzerland (LSE:WOSG) stocks as an attractive investment. The luxury watch retailer has seen its share price fall by almost 38% over the past year, significantly underperforming its industry peers and the wider UK market. But is it a great opportunity for seasoned investors? Let’s take a closer look.

No time?

The company operates as a luxury watch and jewellery retailer in the UK, Europe and the US. While the company has an impressive heritage dating back to 1775, its recent performance has been far from stellar.

The company’s profit margins have fallen significantly, falling from 7.9% last year to just 3.8% in its latest report. This compression in profitability is a red flag that shouldn’t be ignored. In addition, the company’s share price has been highly volatile, falling a massive 37% in a single day in January after it issued a profit warning.

What is most disturbing to me is that the discounted cash flow (DCF) analysis indicates that the company is already overvalued by an incredible 287%. This is just one indicator, but considering that investors have already lost a lot this year, I would be worried about more difficulties in the future.

Signs of optimism

It’s not all bad news for Watches of Switzerland, though. The company’s price-to-earnings (P/E) ratio of 16.3 times is slightly lower than the UK market average of 16.7 times, suggesting it may be trading at a fair value relative to its peers. What’s more, analysts are forecasting well earnings growth of 17.35% per year.

The company also appears to be in good financial shape, with more cash than debt. This solid foundation could facilitate the company weather short-term storms and position itself for future growth.

The analyst community seems divided on the outlook for Watches of Switzerland. The stock currently has a consensus rating of “Moderate Buy,” based on 6 “Buy” and 3 “Hold” ratings from analysts in the past three months. The average target price of 486.38 pence implies a potential upside of almost 18% from the current share price.

However, it is worth noting that some analysts have recently lowered their price targets. Bank of America For example, the security lowered its target from 700p to 650p while maintaining its “hold” rating.

Worth watching

So is it time for action for Watches of Switzerland? While the company faces significant challenges, including compressed margins and a hard macroeconomic environment, it may be too early to declare the end for the luxury retailer.

Despite mixed ratings and valuations, the company’s mighty balance sheet and projected earnings growth suggest the elderly watch may still have some life left in it. But potential investors should be aware of the risks, including the company’s recent frail results and share price volatility.

So while Watches of Switzerland’s share price may suffer some further, only time will tell whether it can regain its shine as a standout investment in the UK market. For now, I’ll add it to my watchlist.