Momentum: Skechers USA (SKX)

By Aug 6, 2010, 1:47 AM Author's Blog  

Skechers USA, Inc. (SKX) is fresh off the heels of another awesome quarter, posting an 86% earnings surprise in late July. Estimates have since taken a nice jump forward, with the next-year estimate now projecting 12% growth.

Company Description

Skechers USA, Inc. designs and sells footwear for men, woman and children in the United States and internationally. The company was founded in 1992 and has a market cap of $1.61 billion.

While consumers are still battling high levels of unemployment, there is no question the environment has improved since the darkest days of 2008 and 2009. That general trend helped Skechers deliver another solid quarter on July 28 that easily beat expectations.

Second-Quarter Results

Revenue for the period was up 69% to $505 million. Earnings also came in strong at 82 cents, 86% ahead of the Zacks Consensus Estimate. The company now has an average earnings surprise of 41% over the last four quarters.

The quarter marks the first time the company has produced $500 million in revenue, helping push sales for the first six months of the year over $1 billion. CEO Robert Greenberg reminded investors that the gains came in a retail environment that has only seen marginal improvements from last year.

Balance Sheet

The company also continues to maintain a very strong balance sheet, with cash and equivalents totaling $273 million against total debt of $32 million.

Estimates Climbing

Estimates took a nice jump forward on the good quarter, with the current year adding 55 cents to $3.81 and the next year adding 68 cents to $4.27, a solid 12% growth projection.

Valuation

Not only is Skechers a very hot company right now with its explosive sales growth, its shares are trading deep in value territory with a forward P/E of 9X compared to its peers 14X.

2-Year Chart

Shares of SKX are once again pressuring a key level of support at the trend line that has been in play for the last year, take a look below.

Momentum: Skechers USA (SKX)

SKECHERS USA-A (SKX): Free Stock Analysis Report

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