Perhaps it's just us, but could this thing be due for a breather..
Agreed, it's not likely to crash, there is a very firm uptrend in place, but it's severely overbought (RSI is almost 90) after the graph has gone almost parabolic.
Nike still has the largest share, with 62% of the market.
But thanks to some recent investments, Skechers is now one of the hottest shoe companies in America.
Skechers is "is the latest beneficiary of the so-called athleisure trend in retail, with shoppers snapping up sport-styled clothes and shoes regardless of whether they plan to work out in them," according to WSJ.
It's also one of the most underrated companies, according to a recent report by Morgan Stanley.
"Skechers is a much better company than the Street appreciates," analysts wrote in a recent note to clients.
The company achieved record sales of $2.4 billion in 2014. The share price has more than doubled in the past year.
While the company used to be known for making cheap knockoffs of designer shoes, it has recently started cultivating its own aesthetic.
"The Skechers brand has evolved from a knock-off brand, to more one with its own looks and styles," Morgan Stanley's analysts write.
Skechers also invested in upgrading its factories and distribution centers.
Finally, Skechers also improved its marketing strategy.
The brand hired singer Demi Lovato to promote a line for teens. It also started selling a shoe designed specifically for golf, endorsed by professional player Matt Kuchar.
Athletic apparel and footwear is set to outperform the industry for the next five years.
The number of people participating in running events has grown an average of 9% every year since 2005, according to Morgan Stanley. Data also shows that millennials believe exercise is essential for health, while their parents only focused on diet.
"Increased activity leads to increased athletic apparel and footwear spending," the analysts write. "We see athletic footwear and apparel as more than a fashion trend."
While the popularity of yoga pants and sneakers is often cited as a fashion trend, Morgan Stanley analysts believe that shoppers are hooked on casual comfort.
The analysts believe that shoppers will continue to choose this kind of apparel.
NEW YORK (TheStreet) -- Shares of Skechers (SKX -Get Report) finished the day up by 3.58% to $105.65 on Tuesday, following a report from The Wall Street Journalsaying the shoe maker is now in second place in the U.S. sports footwear market.
Skechers made up 5% of the sports footwear market for the quarter ended in March, data from retail tracker NPD Group shows, The Journal reported.
The company, which is responsible for the "Shape-Up" sneaker, is now second toNike (NKE) and its popular Jordan brand, which accounted for 62% of athletic shoes sold in the U.S. during the most recent quarter.
The rise in Skechers sales highlights America's growing desire for less expensive shoes that may never actually be used for running, The Journal noted, adding that Skechers' sales grew by 29% last year to $2.4 billion.
Separately, TheStreet Ratings team rates SKECHERS U S A INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate SKECHERS U S A INC (SKX) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
The revenue growth came in higher than the industry average of 11.0%. Since the same quarter one year prior, revenues rose by 40.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
SKX's debt-to-equity ratio is very low at 0.10 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, SKX has a quick ratio of 1.77, which demonstrates the ability of the company to cover short-term liquidity needs.
Powered by its strong earnings growth of 80.32% and other important driving factors, this stock has surged by 145.87% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, SKX should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
SKECHERS U S A INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, SKECHERS U S A INC increased its bottom line by earning $2.72 versus $1.08 in the prior year. This year, the market expects an improvement in earnings ($4.17 versus $2.72).
The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Textiles, Apparel & Luxury Goods industry. The net income increased by 81.1% when compared to the same quarter one year prior, rising from $30.97 million to $56.08 million.
["the "Shape-Up" sneaker, is now second toNike (NKE) and its popular Jordan brand, which accounted for 62% of athletic shoes sold in the U.S. during the most recent quarter"]
Nike with a whopping 62% of the market, that's rather huge
It does make considerable sense. One discovers a trend in the always fickle branded clothing/footwear/fast food, whatever, market. What is hot and growing sales? Jump on board in the stock market. Spot the trend early, and you can ride a wave, because others will discover the trend as well and get on board also.
These trends could last quite a bit and as long as they're expected to continue, it is a bit of an afterthought how expensive the shares already are.
Branding is powerful, it can be spread to other items and other markets, as long as it's not spread too thin.
This works until it doesn't. At the first sign of a trend flattening (let alone reversing), or some managerial incompetence or overreach, the sell-off is likely to be rather brutal..
On February 18, I wrote that Skechers - not Nike (NYSE: NKE) or Under Armour (NYSE: UA) - was the shoe company ready to "kick up," a conclusion I reached due to their growing global presence, astute addressment of the children's market, and investments in infrastructure to support further growth.
Skechers (NYSE:SKX): "These guys have created immense wealth and it's ok if they cash some of it as they are charitable. It's the second largest footwear company and finally getting its due. If you got big gains, you can take some profits, but this remains a good company."
Some info on the Q3 miss, that caused the major sell-off:
The Manhattan Beach, CA-based company reported earnings of 58 cents per share, topping analysts' 54 cents per share expectations. The company had reported sales of $856.2 million, missing analysts' $877 million expectations. On a non-adjusted basis, the company reported earnings of 43 cents per share after being hurt by currency headwinds that totaled $13.5 million and legal expenses of about $5 million from personal injury settlements tied to its toning footwear business. Additionally, the company has paid $6 million in legal fees and costs related to its ongoing litigation against rival Converse, which made a claim of trademark infringement over shoes it says resemble Converse's iconic Chuck Taylor sneaker.
Skechers U.S.A. Inc. lost almost a third of its value after quarterly sales trailed analysts’ estimates for the first time in two years, raising concern that the shoemaker’s growth streak is waning. While revenue rose 27 percent to $856.2 million in the third quarter, that fell short of analysts’ $876.6 million average estimate. The last time Skechers’ sales missed projections was in the quarter that ended in October 2013. Skechers had been on a roll, with surging sales of its shoes helping the shares more than double this year. That hot streak made the miss especially disappointing for investors. Chief Operating Officer David Weinberg said in a statement Thursday that the "sluggish" economic environment in the U.S. affected domestic sales, while the dollar’s strength restrained its growth abroad. Net income rose 30 percent to $66.6 million, or 43 cents a share.
Citigroup’s Corinna Van der Ghinst and Kate McShane contend that the “bear concerns are overdone” after Skechers USA (SKX) big earnings miss: Ann Parry/ ZUMAPRESS.com 1) We acknowledge US retail challenges could continue into holiday as retailers are likely to get increasingly promotional, which could carry over into cautious orders/cancellations for Spring. As a result, we reduced our US wholesale ests for Q4 & all of FY16 to assume a softer environment. Our TP goes to $44 (details below). However, Skechers’ Q3 US wholesale was still +DD despite a tougher environ.; 2) We’ve noted Skechers is a stock where investors tend to pull the trigger first & ask questions later. However, the LT thesis remains intact in our view, led by int’l & signif. margin upside. With after-mkt shares at ~18x our updated FY16 EPS (in-line w/ peers), today’s pullback creates a rare buying oppty that we haven’t seen w/ the stock up 150% YTD. Even on our reduced ests, Skechers is still poised to deliver EPS growth at 3x the peer avg (+LDD%).
Even though Skechers did miss Wall Street's consensus revenue estimate, Cramer did not consider it a big miss. Its sales still increased 27 percent, year over year, though earnings were suboptimal with a 12-cent miss from a 55-cent basis. Cramer attributed the culprit of the miss being the work of a strong dollar, a $5 million personal injury lawsuit settlement and increased deferred rent expenses of $3.5 billion at the company's Fifth Avenue store in New York City. "If not for these three items, Skechers would have actually beat the numbers," Cramer said.
Most important of all, Skechers maintained its guidance for the next quarter. Could this be a rare buying opportunity for the stock? To find out, Cramer spoke with the Skechers chief operating officer and chief financial officer, David Weinberg. He said that he thinks this was an overreaction, stating, "Business is very good and continues to be very good." Weinberg also added that Skechers was assured by all of its partners that the sell-through rates and reasons for slight weakness at the end of September were not due to the company, but due to an overall condition. The term sell-through refers to the percentage of units shipped that were actually sold.
