Skechers soars after 3Q17 results
Skechers’ stellar 3Q17 performance drove its stock price up 41% on October 20. It was the company’s biggest one-day gain since the company was listed in 1991.
The company’s YTD losses were transformed to YTD gains of 38%, and it’s currently among the better-performing apparel companies. In comparison, peers Under Armour (UAA) and Lululemon Athletica (LULU) have lost ~40% and ~3% YTD, while Columbia Sportswear (COLM) and Nike (NKE) have risen 4.4% and 3%, respectively.
Skechers’ stock still has an upside of 4% based on the average target price of $35.30. Read the next section to know about analyst recommendations for the company
Comparing Skechers’ valuations with peers
The rise in Skechers’ stock price drove its forward PE (price-to-earnings) ratio to 16.5x from 13x before the results. The company has moved closer to its three-year average valuations of 16.2x.
However, it’s still cheaper than most peers. Under Armour, Lululemon, Nike, and Columbia Sportswear, in comparison, are trading at 46x, 25.4x, 22.3x, and 22x, respectively.
Comparing earnings potential
Skechers’ valuations look even more attractive when we look at its near-term earnings potential. The company’s EPS is expected to expand 28% over the next 12 months (or NTM). In comparison, Columbia Sportswear, Nike, and Lululemon are predicted to witness a 3.4%, 1.1%, and 14.3% jump in NTM EPS, respectively, while Under Armour is projected to record a 21% decline.
ETF investors seeking to add exposure to SKX can consider the Guggenheim S&P MidCap 400 Pure Growth ETF (RFG), which invests ~1.5% of its portfolio in the company.