On Jul 26, 2014, Zacks Investment Research upgraded
Skechers U.S.A., Inc.
) to a Zacks Rank #1 (Strong Buy) on solid earnings backdrop.
Shares of this designer, developer, marketer and distributor of
footwear, jumped 8% since second-quarter 2014 earnings announcement
on Jul 23.
Why the Upgrade?
For Skechers, 2014 is turning out to be an exceptional year.
After a robust first quarter performance, the company yet again
came up with stellar second quarter results, and since then has
been witnessing rising earnings estimates. The quarterly earnings
came in at 68 cents a share that fared significantly better than
the Zacks Consensus Estimate of 41 cents and the prior-year quarter
earnings of 14 cents on the back of strong top-line growth and
effective cost management.
Increased demand for products and their innovation across
multiple categories as well as a healthy performance across all
revenue channels led to a 37.1% rise in net sales to $587.1 million
in the quarter, which handily surpassed the Zacks Consensus
Estimate of $505 million.
Skechers is now showing signs of stability, having delivered
positive earnings surprise in the three successive quarters - 65.9%
in the second quarter of 2014, 84.9% in the first quarter and 64.7%
in the fourth quarter of 2013.
With more emphasis on a new line of products, increased backlog,
cost containment efforts, inventory management and margin
improvement, the company anticipates sustained growth momentum in
2014. We believe Skechers, through its distribution networks,
subsidiaries and joint ventures is poised to enhance its global
reach in the footwear market.
Following the sturdy results, the Zacks Consensus Estimate for
2014 and 2015 increased by 17% and 11.2% to $2.41 and $2.99,
respectively, in the last 30 days.
Other Stocks to Consider
Other stocks worth considering in the retail sector include Citi
Trends, Inc. (
) and The Men's Wearhouse, Inc. (
) both carrying a Zacks Rank #1 (Strong Buy), and Deckers Outdoor
) holding a Zacks Rank #2 (Buy).
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