Kick em while they're down SKX

https://www.marketbeat.com/stocks/NYSE/SKX/?RegistrationCode…

MS downgrades to PT of $25

JT

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NEW YORK (TheStreet) – Shares of Skechers (SKX) were slumping in pre-market trading on Wednesday as Morgan Stanley cut its rating on the stock to “equal-weight” from “overweight,” the Fly reports.

The firm also slashed its price target to $25 from $41 on shares of the Manhattan Beach, CA-based footwear company.

Morgan Stanley believes the consumer shift toward pure fashion styles and away from athletic footwear is causing Skechers to alter its variety, which is resulting in slower sales growth, the Fly noted.

Additionally, the firm sees no positive fashion catalysts until the first half of 2017 and expects Wall Street consensus estimates to decline.

https://www.thestreet.com/story/13747039/1/skechers-skx-stoc…

JT

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It is almost scary that a seemingly large amount of shareholders make moves solely on analysts advice. These analyst ratings are notoriously inaccurate, yet we still see large moves each time something is upgraded/downgraded. Ridiculous, seems few people are able to form their own opinions.

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Ridiculous, seems few people are able to form their own opinions.

They form an opinion … whatever the analyst said! :slight_smile:

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It is almost scary that a seemingly large amount of shareholders make moves solely on analysts advice.

I made a move. I bought more SKX.

Bear
way too long SKX

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The stock continues to spiral downward from the open this morning. Down 9% at 11am on 2X daily volume. TTM P/E going to break below 12 if this continues.

The stock continues to spiral downward from the open this morning. Down 9% at 11am on 2X daily volume. TTM P/E going to break below 12 if this continues.

P/S is already below 1. I really didn’t think shares would ever get this cheap, at least not unless revenue started falling or something.

Bear

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On the flip side, maybe this is the final capitulation we have been waiting for. When the last holdouts get disgusted and give up.

At this point, if the stock goes back to $25 a year from now, that’s a rise of 20% from here, which will be great if you get in at $21. The buyers should step in at that level but they may wait a few days to let the dust settle.

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In my mind, the language from the reporting on the downgrade was actually quite funny …

“shift toward pure fashion styles and away from athletic footwear”

If that premise is to be believed, the Skechers is actually a better buy than most. I have always held Skechers main mantra has been a. Affordable; b. Comfortable; c. Fashionable.

Adding SKX in my Roth tomorrow, hope it stays down.

Ani.

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Morgan Stanley believes the consumer shift toward pure fashion styles and away from athletic footwear is causing Skechers to alter its variety, which is resulting in slower sales growth, the Fly noted.

Kind of interesting, given this report on August: http://footwearnews.com/2016/business/retail/shoe-sales-foot…

Highlights:

The NPD Group Inc.’s newest footwear insights report says total U.S. footwear sales declined 2 percent, to $2.5 billion, during the period.

By product category, U.S. fashion footwear sales fared the worst — falling 12 percent year-over-year…

Fashion athletic styles, however, remained a bright spot…

Sales for performance footwear, which includes walking, running, crosstraining and basketball shoes, dropped 8 percent…

Leisure footwear sales were the standout category — gaining 22 percent year-over-year…

I don’t really know how to parse all that. But I like the 22% gain on leisure footwear.

Bear

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another sees a buying opp. If I had the free funds I’d probably be in for some more here too.

http://seekingalpha.com/article/4007621-confession-bought-sk…

I added to SKX today, thank you Morgan Stanley!

I also added to SBNY. Just filling out my position in these 2, not really overweighting yet.

I have also been buying more shares today. This seems like a great GARP (growth at a reasonable price) opportunity on a beaten down stock.

Just to give everyone a quick reminder of the fundamentals.

TTM EPS: 1.75 Non-GAAP
TTM P/E(assuming 21 reached today): 12

Last quarter yes was a weak quarter. Though you also have to keep in mind Q2 last year was abnormally strong pulling sales both from Q1 and Q3. This years Q2 had sales pulled away into Q1 making the Q1 quarter very strong and Q2 numbers weak. These weak numbers were then compared to last years strong Q2 numbers making it feel like a truly bad quarter. Despite this unfavorable comparison revenues still grew from $800 million to $877 million giving us a growth of 9.6% according to the Q2 press release. Now this is admittedly very slowed growth but it is still good growth from a company trading at a P/E of 12.

Looking at a 6 month comparison will help even out some of the sales fluctuations Q over Q. In the previous 6 months skechers had revenues of $1.86 billion compared to a year ago of $1.57 billion giving us a 6 month YOY growth rate of 18.4%. Not bad for a company currently trading for a P/E of 12.

Looking at the 6 month earnings they earned $1.11 per share compared to a year ago $0.88 per share. That is an EPS growth rate of 26% from a company trading at a P/E of 12.

https://finance.yahoo.com/news/skechers-announces-second-qua…

Now I don’t know what the future will bring and neither does anyone else. I just wanted to remind everyone of the known fundamentals as of Q2 2016 earnings report. It is up to you whether you agree with me on the current stock value or not.

Best,
Soth

27 Likes

Now we have another downgrade from Cowen & Co.

“Skechers price target lowered to $24 from $28 at Cowen & Co.”

Oh well. They saw what we don 't see.

Zangwei

1 Like