Company Analysis - Skechers USA (NYSE: SKX) shares were considered a little pricey in September 2014 [1] Industry Focus - Crude Value Insights focuses on the oil and natural gas sector, emphasizing cash flow and companies with value and growth potential [1] - Subscribers gain access to a 50+ stock model account, in-depth cash flow analyses of E&P firms, and live chat discussions about the sector [3] Subscription Benefits - A two-week free trial is available for those interested in the oil and gas sector [2]

Skechers U.S.A., Inc. (SKX) has demonstrated strong upward momentum, trading above its 50 and 200-day simple moving averages (SMAs). SMA is a key indicator of price stability and long-term bullish trends. The company ended Friday’s trading session at $70.09, above its 50 and 200-day SMAs of $65.62 and $65.60, respectively, highlighting a continued uptrend. This technical strength, combined with consistent momentum, indicates positive market sentiment and investor confidence in Skechers’ financial stability ...

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]