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Skechers Misses on Earnings, Beats on Revenue in 2Q17

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Skechers’s 2Q17 results overview

California-based Skechers (SKX) reported its 2Q17 results after the market closed on July 20, 2017. The results relate to the three-month period that ended on June 30, 2017.

The company posted a 17.3% rise in revenue to $1 billion, beating the consensus estimate by $63.5 million. The company’s EPS (earnings per share), however, fell short of expectations by $0.06 to $0.38 in the quarter.

The company also revised its 3Q17 earnings and revenue guidance. It now expects $1.05–$1.08 billion in revenue, compared to consensus expectations of $1.06 billion. Its 3Q17 EPS are expected to land between $0.42 and $0.47, below the consensus expectation of $0.56.

ETF investors seeking to add exposure to SKX can consider the First Trust Consumer Discretionary AlphaDEX ETF (FXD), which invests ~0.9% of its portfolio in the company.

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Valuation update and stock recommendations

SKX is currently trading at a one-year forward price-to-earnings ratio of 14.7x, compared to Nike’s (NKE) 24.3x, Columbia Sportswear’s (COLM) 20.5x, and Lululemon Athletica’s (LULU) 25.9x.

The average 12-month price target from the 12 analysts covering SKX is $31.45, indicating a downside of 11% over the next year. This potential upside is higher than Nike’s 5%, Columbia Sportswear’s 10%, and Lululemon’s 0%.

What’s this series all about?

The current series is an overview of Skechers’s 2Q17 results. In this series, we’ll discuss the company’s financial performance during the quarter by evaluating its key revenue drivers and profitability. We’ll also talk about Wall Street’s view of the company, its stock market performance, and its current valuation.

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