With increased focus on the new line of products, cost containment, inventory management, a global distribution platform and sturdy backlogs, Skechers USA Inc. SKX remains confident of sustaining its growth. Shares of this designer, developer, marketer, and distributor of footwear hit a 52-week high of $116.54 on Jul 2. The stock has more than doubled year to date. Moreover, we believe that its strong fundamentals are capable of providing further impetus.
The momentum did halt for a while when Skechers delivered a negative earnings surprise of 2.3% in the final quarter of 2014. However, the company rebounded strongly and commenced 2015 on an upbeat note, delivering a positive earnings surprise of 8.9% in the first quarter. In the trailing four quarters, this Zacks Rank #2 (Buy) company has outperformed the Zacks Consensus Estimate by 22.5%.
Skechers is now showcasing strength and a positive sentiment is palpable among analysts covering the stock. This is apparent from the upward movement in the Zacks Consensus Estimate over the past 90 days. The Zacks Consensus Estimate increased 7.1% to $4.25 per share for 2015 and 7% to $5.38 per share for 2016.
Management remains committed toward focusing on innovative products, opening additional stores and increasing distribution channels to improve sales and profitability. Also, Skechers’ international business continues to be a significant revenue growth driver. Management remains confident that overseas operations will contribute 50% to total sales over a 3–4 year time frame.
Moreover, a healthy balance sheet, with cash and cash equivalents of $396.7 million and long-term debt of $13.7 million at the end of first-quarter 2015, indicate that there remains optimum liquidity to capitalize on the same.
Other Stocks to Consider
Other favorably ranked stocks in the retail space include American Eagle Outfitters, Inc. AEO, G-III Apparel Group, Ltd. GIII, sporting a Zacks Rank #1 (Strong Buy), and NIKE, Inc. NKE carrying a Zacks Rank #2.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment