SKECHERS USA, Inc. (SKX) has seen its stock slide in the last 2 months making it an extremely attractive value stock at just 7x forward estimates.

The footwear manufacturer, which sells in its own retail stores, department stores and on its e-commerce web site, continues to see strong sales of its shape-up shoes which the company claims tone your muscles, promotes healthy weight loss and make it easier to get in shape. (A dream come true!) The shoes come with an exercise DVD as well.

The shape-ups are being marketed for both men and women, with SKECHERS using Hall of Fame quarterback Joe Montana as a spokesman in its marketing campaign. This summer there was also a tone-up flip flop sandal.

Other shoe styles have also been gaining in popularity, especially the popular twinkle toe line for children, which some adults have wished was designed for them.

Big Stock Slide After All Time High

SKECHERS stock hit an all-time high in June but since then, there has been a sharp reversal.

You can see the sell-off in the two year chart below:

The sell-off has not been on fundamentals as the company continues to produce solid results. Retail stocks have been out of favor recently as investors have gotten jittery about the recovery and a possible double dip.

This has presented investors with an opportunity.

Yet Fundamentals Still Solid

On July 28, SKECHERS reported record second quarter sales which climbed 68.9% to $504.9 million, the first time in its 18 year history that the company booked sales over $500 million in a quarter.

The company blew by the Zacks Consensus Estimate by 86.4%. Earnings per share were also a record for the second quarter at 82 cents compared to the Zacks Consensus of 44 cents.

It has surprised on estimates the last 4 quarters by an average of 41%.

Zacks Consensus Estimates Rise

The company didn’t provide EPS guidance but it did sound extremely optimistic about its performance during the back-to-school period and that it was expecting big things for the rest of 2011.

The 2010 Zacks Consensus has risen 19.8% in the last 60 days to $3.81 from $3.18 per share. This is earnings growth of 228%.

Analysts also expect another 11% growth in 2011.


When I last reviewed SKECHERS in April 2010, it was trading around 14x estimates. But now, it is dirt cheap, even compared to its peers.

Its price-to-book ratio has fallen from 2.5 to 1.4. Its peers trade at 2.3.

The company’s price-to-sales ratio is also an attractive 0.7, while its peers average around 1.0.

It has a return on equity (ROE) of 18.8%.

SKECHERS is a Zacks #1 Rank (strong buy) stock.

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

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About Tracey Ryniec 60 Articles

Affiliation: Zacks Investment Research

Tracey Ryniec is the Value Stock Strategist for She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at

Visit: Zacks Investment Research

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