Will Skechers’s Q1 Results Help the Stock Keep Up Its Strong Run?



Strong year-to-date movement

Skechers (SKX) stock was up 52.2% on a year-to-date basis as of April 15. The footwear company is scheduled to report its first-quarter results on April 18. Skechers announced mixed results for the fourth quarter of 2018 after the markets closed on February 7. Skechers stock surged 15.2% on February 8 as the company’s fourth-quarter EPS beat analysts’ expectations by 35% despite sales falling short of expectations.

As of April 15, stocks of rivals Nike (NKE), Under Armour (UAA), and Columbia Sportswear (COLM) had risen 17.1%, 24.0%, and 22.9%, respectively, year-to-date but lagged behind the strong surge in Skechers stock. Skechers is also ahead of the S&P 500 Index, which rose 15.9% as of April 15.

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Analysts’ recommendations

On March 27, Susquehanna upgraded its recommendation for Skechers stock to “positive” from “neutral,” backed by the growing momentum in the company’s business. Susquehanna increased its price target to $37 from $32. On April 15, UBS increased its price target to $39 from $37.

As of April 15, Skechers stock was rated a “buy” by seven analysts while six analysts had a “hold” recommendation. None of the analysts had a “sell” rating for the stock. The average 12-month price target of $35.64 for Skechers stock indicates an upside potential of 2.0%.

Analysts expect Skechers’ first quarter adjusted EPS to fall about 2.7% to $0.73 as higher sales are expected to be weighed down by foreign currency headwinds and growth investments.

Skechers’ retail store base included 692 company-owned stores and 297 joint-venture stores in 2018. Overall, Skechers’ products sold through 2,998 company-owned and third-party-owned stores in 2018.

Skechers plans to open 70 to 80 new company-owned retail stores and remodel or relocate 20 to 30 stores this year. This guidance excludes the stores that the company plans to open in India.

Skechers sees significant growth opportunities in the Indian market. The company had 220 retail stores in India in 2018, of which over 60 were wholly owned. Skechers plans to open 80 to 100 new stores in India this year.


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