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October 2016
#1

Some solid advice from Zack's Steve Reitmeister:

Most likely we stay range bound until the election is in the books. That range would be 2120 to 2190...the same range we played around with in September. 

If that is true, then right now we are closer to the top of the range and not a great spot to put fresh money to work. Wait for another dip lower before pulling the trigger.

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#2

And yet another sell-off in Skechers (SKX). Surprising and not surprising at the same time. However, keep in mind that:

  • Revenue is still growing at 10%
  • In the quarter, domestic retail sales increased by 8.1% and international retail sales by 45.3%
  • International wholesale business increased by 18.3%
  • US wholesale business declined by 3.4%
  • at September 30, 2016, we had $665.3 million in cash and cash equivalents or $4.29 per diluted share (that is, they still added $$36M to cash in the quarter)
  • Long-term debt was $67.6 million compared to $70.1 million at September 30, 2015.
  • Capital expenditures for the third quarter were approximately $25.8 million, of which $12.9 million was primarily related to 11 new company-owned domestic and international store openings and several store remodels, and $5.5 million for equipment upgrades and automation of our European distribution center. We expect our capital expenditures for the remainder of 2016 to be approximately $5 million to $10 million, which includes an additional 15 to 20 retail store openings and the completion of our European distribution automation system later this year.
  • With over 1,710 retail stores worldwide and a planned 1,850 to 1,875 by year end, we believe they are powerful brand building tools
  • Diluted earnings per share were $1.53 on approximately 155 million average shares outstanding compared to diluted earnings per share of $1.31 on approximately 154.1 million shares last year.
  • exchange losses of approximately $8.1 million or $0.04 per diluted share.

The latter means that the company will have a 2016 EPS of roughly $2 which means that the shares are trading under 10 times earnings. Net cash is $4 per share, they have a very clean balance sheet and are generating cash, Unless the company comes to a screetching halt in terms of growth, this is very cheap indeed. The only part that isn't performing is the US wholesale business.

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#3

Within the new stock ideas forum, we set up some potential trading shorts (AKAM, CPLA, STRA). We take the AKAM at $70

  • Sell 500 AKAM $70
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#4

Funny thing, of the suggested shorts yesterday (see the New Stock Ideas forum):

And other ones recently:

The only ones not down substantially are AKAM and ASMB

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