Company Performance - Skechers (SKX) closed at $70.09, reflecting a +1.13% change from the previous day's close, outperforming the S&P 500 which fell by 1.54% [1] - Over the past month, Skechers shares experienced a loss of 1.13%, which is better than the Consumer Discretionary sector's loss of 4.47% and the S&P 500's loss of 2.2% [1] Upcoming Earnings - The earnings report for Skechers is scheduled for February 6, 2025, with an expected EPS of $0.73, indicating a 30.36% increase compared to the same quarter last year [2] - The Zacks Consensus Estimate projects net sales of $2.22 billion, representing a 13.04% increase from the previous year [2] Analyst Estimates - Recent changes to analyst estimates for Skechers reflect shifting short-term business dynamics, with positive revisions indicating optimism about the company's profitability [3] - The Zacks Rank system, which incorporates these estimate changes, provides actionable ratings for investors [4] Zacks Rank and Valuation - Skechers currently holds a Zacks Rank of 2 (Buy), with no changes in the Zacks Consensus EPS estimate over the past month [5] - The company has a Forward P/E ratio of 14.36, aligning with its industry's Forward P/E of 14.36, and a PEG ratio of 0.85, compared to the industry average of 1.71 [6] Industry Context - The Shoes and Retail Apparel industry, part of the Consumer Discretionary sector, has a Zacks Industry Rank of 165, placing it in the bottom 35% of over 250 industries [7] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [7]

Core Insights - The article emphasizes the investment philosophy focused on small cap companies, highlighting the importance of identifying mispriced securities through understanding financial drivers and utilizing DCF model valuation [1]. Group 1 - The investment strategy is not confined to traditional categories such as value, dividend, or growth investing, but rather considers all prospects of a stock to assess risk-to-reward [1].

Core Insights - Skechers aims for $10 billion in annual sales by 2026, planning capital expenditures of $375-$400 million to support store openings, omnichannel capabilities, and distribution infrastructure [2][20]. Financial Performance - Skechers' shares are currently trading 9.8% below their 52-week high of $75.09, with an 8.1% gain over the past year, outperforming the Zacks Shoes and Retail Apparel industry's 22.9% decline [6]. - The company revised its fiscal 2024 sales forecast to $8.93-$8.98 billion, up from a previous estimate of $8.88-$8.98 billion, indicating growth from $8 billion in fiscal 2023 [12][21]. - Earnings per share (EPS) guidance has been increased to $4.20-$4.25 from $4.08-$4.18, reflecting a rise from last year's EPS of $3.49 [21]. Sales Growth - The Direct-to-Consumer (DTC) segment saw a 9.6% year-over-year sales increase to $931.7 million, with international DTC sales growing 14.4% and domestic sales increasing by 3.7% [9]. - The wholesale segment reported a 20.6% year-over-year sales increase to $1.42 billion, driven by a 26% rise in domestic sales and an 18% increase in international sales [10]. Retail Expansion - Skechers operates 5,332 branded stores globally, including 1,743 company-owned locations, and plans to open 55-60 additional stores in the fourth quarter [11]. - International revenues rose 16.4% year over year, accounting for 61% of total revenues, with EMEA leading at a 30.2% increase [26]. Strategic Initiatives - The company is adopting a multi-brand strategy to diversify its portfolio, focusing on comfort-oriented footwear and enhancing its infrastructure for e-commerce and retail operations [18][22]. - Ongoing investments in logistics and retailer relationships are expected to drive growth in the wholesale segment throughout fiscal 2024 [10].

Core Viewpoint - Skechers (SKX) has been upgraded to a Zacks Rank 2 (Buy) due to an upward trend in earnings estimates, indicating a positive outlook for the company's stock price [6][7][17]. Earnings Estimates and Revisions - Analysts have raised their earnings estimates for Skechers, with the Zacks Consensus Estimate increasing by 1.9% over the past three months [10]. - For the fiscal year ending December 2024, Skechers is expected to earn $4.24 per share, reflecting a 21.5% increase from the previous year's reported number [15]. Zacks Rating System - The Zacks rating system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 (Strong Buy) stocks historically generating an average annual return of +25% since 1988 [9]. - The upgrade of Skechers places it in the top 20% of Zacks-covered stocks in terms of estimate revisions, suggesting potential for near-term stock price increases [5][17]. Market Impact - Rising earnings estimates and the corresponding rating upgrade imply an improvement in Skechers' underlying business, which could lead to higher stock prices as investors respond positively [8][12]. - The correlation between earnings estimate revisions and near-term stock movements is strong, making it beneficial for investors to track these revisions for investment decisions [14].

Core Insights - The article emphasizes the importance of using Zacks Rank and Style Scores to identify stocks with high potential for outperformance in the market [2][4][11]. Company Overview - Skechers U.S.A., Inc. designs, develops, markets, and distributes footwear for men, women, and children under the SKECHERS brand and other uniquely branded names [18]. Earnings Estimates - For fiscal 2024, five analysts have revised their earnings estimates upwards in the last 60 days, with the Zacks Consensus Estimate increasing by $0.09 to $4.24 per share [19]. Stock Ratings - Skechers (SKX) currently holds a Zacks Rank of 3 (Hold) and has a VGM Score of A, indicating a solid position in the market [7][8]. - The company also has a Value Style Score of B, supported by attractive valuation metrics such as a forward P/E ratio of 15.62, making it appealing to value investors [24]. Investment Strategy - To maximize returns, investors are encouraged to focus on stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B, which increases the probability of success [5][6].

Core Viewpoint - Skechers U.S.A., Inc. (SKX) is identified as a compelling value play in the Shoes and Retail Apparel industry, trading at a forward price-to-earnings ratio of 14.20, which is significantly below the industry average of 23.44 and the Consumer Discretionary average of 19.36, indicating potential for investors seeking attractive entry points [1] Financial Performance - SKX shares are currently trading 9.1% below their 52-week high of $75.09, reached on June 12, 2024, while the stock has gained 12.3% in the past month, outperforming the industry's growth of 4.9% [2] - The company closed the last trading session at $68.23, trading above its 50-day and 200-day simple moving averages of $64.20 and $65.02, respectively, indicating a continued uptrend [3][4] Growth Strategies - Skechers is making significant investments in global infrastructure, focusing on retail stores, e-commerce platforms, and distribution centers to enhance omnichannel capabilities and expand its direct-to-consumer (DTC) business [6] - The wholesale segment is expected to continue growing throughout fiscal 2024, with third-quarter sales rising 20.6% to $1.42 billion, driven by a 26% increase in domestic sales and an 18% rise internationally [7] - The DTC segment achieved strong performance in the third quarter, with sales increasing 9.6% year over year to $931.7 million, reflecting the company's focus on consumer engagement and online platform expansion [8] International Sales - International sales have seen substantial year-over-year growth of 16.4%, now accounting for 61% of Skechers' total sales, highlighting the importance of its global presence [9] Financial Outlook - Skechers has raised its fiscal 2024 sales forecast to between $8.93 billion and $8.98 billion, up from the previous estimate of $8.88-$8.98 billion, reflecting solid growth from $8 billion reported in fiscal 2023 [10] - The company also raised its earnings per share (EPS) guidance to $4.20-$4.25 from $4.08-$4.18, showcasing significant growth from the $3.49 EPS achieved last year [10] Capital Expenditure - To support its goal of reaching $10 billion in annual sales by 2026, Skechers anticipates capital expenditure of $375-$400 million, focusing on store openings and enhancing distribution infrastructure [11] Margin Challenges - Skechers registered an 80-basis-point contraction in the third-quarter gross margin to 52.1% due to higher promotional activities and pricing pressures, with expectations of flat or slightly declining margins in the fourth quarter [12] - The company experienced a 5.7% decline in sales in China, attributed to macroeconomic challenges and subdued consumer spending on non-essential goods, which is concerning given China's role in Skechers' international growth strategy [13] Investment Sentiment - Despite promising growth potential, Skechers faces near-term challenges such as margin pressures and a slowdown in China, reflected in a Zacks Rank 3 (Hold), suggesting investors may want to wait for clearer signs of margin recovery before making new investments [14]

Core Insights - Zacks Premium offers various tools for investors to enhance their stock market strategies, including daily updates, research reports, and stock screens [1][2] Zacks Style Scores - The Zacks Style Scores provide a rating system for stocks based on value, growth, and momentum, helping investors identify securities likely to outperform the market in the short term [3][4] - Stocks are rated from A to F, with A indicating the highest potential for outperformance [4] Categories of Style Scores - **Value Score**: Focuses on identifying undervalued stocks using financial ratios like P/E and Price/Cash Flow [5] - **Growth Score**: Evaluates stocks based on future earnings and sales growth potential [6] - **Momentum Score**: Assesses stocks based on recent price trends and earnings estimate changes [7] - **VGM Score**: Combines all three Style Scores to highlight stocks with the best overall characteristics [8] Zacks Rank and Performance - The Zacks Rank is a proprietary model that uses earnings estimate revisions to help investors build successful portfolios [9] - Stocks rated 1 (Strong Buy) have historically produced an average annual return of +25.41% since 1988, significantly outperforming the S&P 500 [10] Stock Selection Strategy - To maximize returns, investors should focus on stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B [12] - Stocks with lower ranks, even if they have good Style Scores, may still face declining earnings forecasts [13] Company Spotlight: Skechers (SKX) - Skechers U.S.A., Inc. is a footwear company with a Zacks Rank of 3 (Hold) and a VGM Score of A [15] - The company has a Momentum Style Score of B, with shares increasing by 16.2% over the past four weeks [16] - Analysts have raised earnings estimates for fiscal 2024, with the Zacks Consensus Estimate now at $4.24 per share, reflecting an average earnings surprise of 8.8% [16][17]

Core Insights - Skechers U.S.A., Inc. is positioned for sustained growth through its multi-brand portfolio, digital integration, wholesale growth, direct-to-consumer (DTC) expansion, and international business [1][2][12] - The company has adapted to evolving consumer preferences, focusing on comfort technology and lifestyle-oriented products, which has significantly contributed to its success [1][12] Growth Initiatives - Skechers is investing heavily in global infrastructure, enhancing retail stores, e-commerce platforms, and distribution centers to improve omnichannel capabilities and grow its DTC business [3] - The wholesale segment is expected to continue growing throughout fiscal 2024, with a 20.6% increase in sales to $1.42 billion in Q3 2024, driven by a 26% rise in domestic sales and an 18% increase internationally [4] - The DTC segment also showed robust growth, with sales climbing 9.6% year over year to $931.7 million in Q3 2024 [5] Financial Performance - Skechers raised its fiscal 2024 sales forecast to between $8.93 billion and $8.98 billion, up from the previous estimate of $8.88 billion to $8.98 billion, indicating growth from $8 billion reported in fiscal 2023 [7] - The company revised its earnings per share (EPS) forecast to $4.20-$4.25, up from $4.08-$4.18, reflecting strong growth from the previous year's EPS of $3.49 [8] Market Position - Skechers' shares have gained 6.7% over the past year, contrasting with a 12.7% decline in the Zacks Shoes and Retail Apparel industry [2] - The stock is trading at a forward 12-month price-to-earnings ratio of 13.29, below the five-year median of 15.29 and the industry average of 23.26, indicating an attractive valuation opportunity [9] Challenges - The company faced a gross margin decline to 52.1% in Q3 2024, down 80 basis points from the previous year due to increased promotions and pricing pressure [11] - Skechers expects margins to remain flat or slightly decline in Q4 due to ongoing freight and promotional costs [11]

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on Skechers (SKX), and highlights the importance of using these recommendations in conjunction with other analytical tools like the Zacks Rank for making informed investment decisions [1][4]. Group 1: Brokerage Recommendations for Skechers - Skechers has an average brokerage recommendation (ABR) of 1.25, indicating a consensus between Strong Buy and Buy, based on recommendations from 12 brokerage firms [2]. - Out of the 12 recommendations, 10 are classified as Strong Buy, while one is a Buy, representing 83.3% and 8.3% of the total recommendations respectively [2]. Group 2: Limitations of Brokerage Recommendations - Solely relying on brokerage recommendations may not be advisable, as studies suggest they often fail to guide investors effectively towards stocks with high potential for price appreciation [4]. - Analysts from brokerage firms tend to exhibit a strong positive bias in their ratings due to vested interests, with five "Strong Buy" recommendations for every "Strong Sell" [5][9]. Group 3: Zacks Rank as an Alternative - The Zacks Rank, which classifies stocks from 1 (Strong Buy) to 5 (Strong Sell), is presented as a more reliable indicator of near-term price performance, driven by earnings estimate revisions [7][10]. - The Zacks Rank is updated more frequently than the ABR, making it a timely tool for predicting future stock prices [11]. Group 4: Current Earnings Estimates for Skechers - The Zacks Consensus Estimate for Skechers remains unchanged at $4.25 for the current year, indicating steady analyst views on the company's earnings prospects [12]. - Due to the unchanged consensus estimate, Skechers has received a Zacks Rank of 3 (Hold), suggesting caution despite the Buy-equivalent ABR [13].

Core Insights - Skechers U.S.A., Inc. (SKX) shares have increased by 26% over the past year, outperforming the Zacks Shoes and Retail Apparel industry's decline of 11.6% [1] - The company is focusing on omnichannel capabilities and global market expansion, leading to significant growth in both wholesale and direct-to-consumer (DTC) segments [1][5] - Skechers' stock is currently trading at a forward 12-month price-to-earnings ratio of 13.09, which is below its five-year median of 15.37 and the industry's average of 25.31, indicating attractive valuation for investors [2] Financial Performance - In Q3 2024, Skechers' wholesale sales rose by 20.6% to $1.42 billion, driven by a 26% increase in domestic sales and an 18% rise internationally [6] - The DTC segment also saw a 9.6% increase in sales, reaching $931.7 million, with international DTC sales up 14.4% [7] - Skechers raised its fiscal 2024 sales outlook to between $8.93 billion and $8.98 billion, up from the previous estimate of $8.88-$8.98 billion, and increased its EPS forecast to $4.20-$4.25 from $4.08-$4.18 [8][10] Strategic Initiatives - The company is investing $375-$400 million in capital expenditures to support store openings, omnichannel expansion, and distribution infrastructure improvements [9] - Skechers' multi-brand strategy allows for the introduction of new products without impacting existing brands, broadening its consumer appeal [4][12] - The focus on comfort technology has enhanced consumer appeal and contributed to robust performance across both physical and online channels [7][12] Market Outlook - Analysts have positively revised earnings estimates for Skechers, with the consensus estimate for the current financial year increased by 7 cents to $4.21 per share [10] - The consensus estimate for the next financial year has also been raised by 4 cents to $4.85 per share, indicating expected growth of 12.2% and 9.4% for the current and next year's sales, respectively [11]