09-05-2016, 11:14 PM
Without a doubt, Skechers has had an incredible 3 years with sales projected to double this year from 2013 levels and earnings to be up nearly 6 fold from 2013 levels. That rate of growth is clearly unsustainable, but it does evidence the fact that Skechers is a completely transformed company from several years ago. We still think public perception is poor in Skechers and hence the steeply discounted valuation. Okay, so as we stand today, Skechers is selling at a massive discount to its competitors, but what is the forward-looking prognosis for the company?
The last 3 years of rapid sales and earnings growth and free cash flow have put Skechers on a very solid financial path. The company has spent $200 million to build out retail stores and build US and global distribution capabilities. Even with that, the company has $620 million in cash and $60 million of long-term debt. By year end, we project the company to have $750 million in cash and approximate annual free cash flow of $250 million per year. That's pretty amazing for a company with a market capitalization of only $3.7 billion.
Skechers Valuation: As Cheap As It Gets - Skechers USA Inc. (NYSE:SKX) | Seeking Alpha