On Oct 24, 2013, we downgraded our recommendation on footwear
Skechers USA Inc.
) to Neutral due to its lower-than-expected third-quarter 2013
BROWN SHOE CO (BWS): Free Stock Analysis
DECKERS OUTDOOR (DECK): Free Stock Analysis
NIKE INC-B (NKE): Free Stock Analysis Report
SKECHERS USA-A (SKX): Free Stock Analysis
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Estimates for Skechers have been declining ever since it reported
third-quarter results on Oct 23. The company's third-quarter
revenues of $515.8 million and earnings per share (EPS) of 53
cents missed the Zacks Consensus Estimate of $519.0 million and
61 cents, respectively.
Following the release of third-quarter results, the Zacks
Consensus Estimate for 2013 went down 5.5% to $1.04 per share.
The Zacks Consensus Estimate for 2014 also declined 3.9% to $1.73
per share. As a result of both these downward revisions, the
company now has a Zacks Rank #4 (Sell).
Though the results were below expectations, both top and bottom
line registered year over year growth. The quarterly earnings did
increase over twofold, while revenue registered growth of 20.1%
owing to strong sales across domestic and international wholesale
operations, and company-owned retail and e-Commerce businesses.
We believe with more emphasis on the new line of products, cost
containment efforts, inventory management, global distribution
platform and strong backlogs, Skechers remains well positioned to
sustain growth momentum.
The pros and cons embedded in the stock supports our unbiased
view on the stock.
Other Stocks that Warrant a Look
While we prefer to wait for an upward revision in Skechers' Zacks
rank other apparel and shoe retailers worth considering include
Deckers Outdoor Corp.
Brown Shoe Co. Inc
). While Brown Shoe carries a Zacks Rank #1 (Strong Buy), both
Nike and Deckers have a Zacks Rank #2 (Buy).