Comparing Skechers’s valuations with peers
Skechers’s (SKX) stock currently trades around 13 times its NTM (next-12-months) earnings, which compares to its three-year average PE (price-to-earnings) ratio of 16.3x.
Not only is the company cheaper historically, but it also trades at a considerable discount to most sportswear peers. In comparison, Under Armour (UAA), Columbia Sportswear (COLM), Lululemon Athletica (LULU), and Nike (NKE) currently trade at 43x, 21.4x, 23.8x, and 21.4x, respectively.
Comparing earnings potential
Skechers is cheaper historically and trading at a discount to peers. Next on the list is earnings potential. Even here, Skechers outperforms all sportswear companies.
The company’s earnings per share are expected to rise ~27% over the next 12 months. As we discussed in the previous part of this series, substantial investments in the company’s international markets are expected to drive growth.
In comparison, Columbia Sportswear, Lululemon, and Nike are expected to see 3.3%, 1.3%, and 14.2% respective jumps in NTM EPS while Under Armour is projected to see a 21% fall.
Skechers’s year-to-date (or YTD) stock performance hasn’t been great. The company is down 0.9% so far. Nevertheless, it has a solid upside. Read the next part of this series to see about expectations for Skechers’s stock over the next year and Wall Street’s recommendations on the company.
ETF investors seeking to add exposure to SKX can consider the Guggenheim S&P MidCap 400 Pure Growth ETF (RFG), which invests ~1.1% of its portfolio in the company.