Sometimes it really is all about the fundamentals, as Skechers (NYSE:SKX) recently demonstrated. The shoemaker recently turned in its earnings announcement and saw the stock climb 16.6% at one point in trading. Though there seems to have been some profit-taking kicking in going into trading this morning, there's still a lot going for the company as a whole.
What did Skechers' Earnings Announcement Show?
Skechers' earnings announcement was textbook gold and produced a big pop in Friday's trading that held nicely through the weekend, with some losses starting to emerge as some investors likely cashed out. Skechers turned in revenue of $1.43 billion, which not only beat the consensus figures of $1.34 billion but also posted a 15% improvement over figures from a year prior.
Earnings per share figures also turned out substantially better than expected, with the established $0.63 per share beating the estimates of $0.46 and nearly double the previous year's figure of $0.32.
Robert Greenberg, Skechers' CEO, offered up some comment as to how these impressive numbers came to be, citing consumers' increased desire for comfortable footwear and buying decisions reflecting this interest. Throw in the arrival of warmer weather, increasing vaccination rates and accompanying reduction in pandemic-related restrictions bringing foot traffic back to retail stores, Greenberg also noted, and the result is a perfect storm of value generation for Skechers. Not that Skechers' online retail was any kind of slouch, of course, but seeing the physical retail side come back certainly can't hurt matters.
What are the Analysts Saying about Skechers?
Meanwhile, for anyone planning on buying the recent dip in Skechers' share price, likely due to profit-taking after the run-up back on Friday, there's good news. The broader analyst pool—as revealed by our latest research—is very much in favor of a buy and has been for the last two years, though the ratio has changed periodically in that time.
A year ago, Skechers had 10 “buy” ratings to its credit and two “hold”. Six months ago, it was the same story; some buyers had departed but others stepped in between May and late October of 2020. Three months ago, the ratio slipped a bit to nine “buy” and two “hold”, and today, we actually have the most bearish figure yet at seven “buy” and three “hold.”
Price targets, meanwhile, are holding a fairly narrow range. The current average is $45, with the high sitting at $57 and the low at $34. Indeed, a lot of the latest action for Skechers has featured price targets increasing; that $57 price target, currently held at UBS Group, is only about three days old, hiked from its original $52. The $34 dollar low, meanwhile, seems to be held at Wedbush, which last adjusted prices back in July 2020, based on our charts.
Should I Buy In on Skechers Stock?
Those interested in picking up stock connected to footwear could certainly do worse than Skechers. The company has a solid product line, and it's getting that product to customers despite a retail environment that's at least kind of hampered by surprisingly enduring pandemic restrictions. The company has embraced the omnichannel concept and is working toward it nicely with its online component working about as well as it can. Throw in a revitalizing physical retail trade and things only get better. The overall environment is even lending a hand; the move toward more comfortable clothing doesn't stop at Under Armour (NYSE:UAA) and sweatpants. Shoes are also a part of that game, especially when leaving the house. Skechers has historically done a good job of producing comfortable shoes, and it shows in the share price.
To suggest that Skechers' growth has already been established, though, may be a bridge too far. The company is still reasonably priced—it closed Friday at $51.89 and it's not much higher than that as of this writing—so looking for further growth isn't really out of line. Skechers is an established brand that's turning in solid performance, and looking at the second half of 2020 saw the company easing steadily upward throughout. That suggests some longevity; gaining in 2020 wasn't an easy act to pull off. Better yet, even if there is a large-scale economic downturn of the type some are looking for, Skechers isn't likely to suffer as it's not a particularly pricey brand of shoe. People still need shoes, even when the economy buckles, so looking for Skechers to continue to sell shoes makes sense.
While the price has been a bit erratic in trading so far today, it's still looking like a solid time to get in on a solid brand that produces a solid item. Skechers is putting on a good show with good shoes, and owning a piece of that action looks like a smart play.
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