Why Skechers Could See Earnings Growth after 5 Quarterly Declines


Oct. 16 2017, Updated 6:05 p.m. ET

What to expect from Skechers’s earnings in 3Q17

Skechers (SKX), which should be reporting third-quarter results on October 19, is expected to post a 31% YoY (year-over-year) rise in earnings per share (or EPS). Wall Street has projected 55 cents in 3Q17 earnings. The company’s bottom line should return to growth after five quarters of consecutive declines. Skechers also missed analyst expectations in four of these five quarters.

Management is projecting lower-than–Wall Street expectations. It guided for an EPS range of 42 to 47 cents during the quarter.

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What has pulled down Skechers’s bottom line?

The recent deteriorating in Skechers’s bottom line has mostly resulted from its ongoing investments in international markets. However, based on these investments, management has predicted double-digit growth in its international wholesale and retail businesses.

How do Skechers’ margins compare to peers’?

However, because of the rising costs, Skechers’s margins have plunged and are lower than most peers’. The company has a trailing-12-month operating margin of 8.7%, which is lower than Nike (NKE) at 13.5%, Lululemon Athletica (LULU) at 15.6%, and Columbia Sportswear (COLM) at 8.8%.

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.

Read the next part of this series to learn about the company’s valuations.


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