Wow, SKX has done it to me again, down 15% in after hours trading (now under $20). I know that doesn’t always mean a lot, but the report doesn’t look like anything to be excited about.
Looks like they missed estimates on both revenues and earnings, and guidance doesn’t look too good, either.
Will have to re-evaluate this holding. At least I’ve got my NFLX pop earlier this week to hang my hat on.
"TheStreet Ratings team rates the stock as a “buy” with a ratings score of B-.
“Skechers’ strengths such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, good cash flow from operations and expanding profit margins outweigh the fact that the company has had sub par growth in net income.”
Oh boy, not exactly awe inspiring is it? Another big disappointment.
Skechers USA Inc.’s shares were in the red in after-market trading today, with the brand reporting third-quarter results that were less than analysts had predicted.
The Manhattan Beach, Calif.-based brand said its Q3 net income slipped 2.2 percent year-over-year, to $65.1 million, or 42 cents per diluted share — missing market watchers’ forecasts for diluted EPS of 47 cents. Skechers said its Q3 diluted EPS were negatively impacted by foreign currency translation and exchange losses of $8.1 million, 4 cents per diluted share.
…
Skechers COO and CFO David Weinberg attributed most of the sales growth in the quarter to an 18.3 percent rise in the brand’s international wholesale business. Skechers’ finance chief said the company will continue to look to international — which now comprises 40.1 percent of total sales, or 47.9 percent including international retail — as the main growth driver in the future.
“We believe the domestic market remains challenging and is continuing to adjust to the changing retail landscape with retailers managing inventory with more caution and ordering much closer to season,” Weinberg added. “We believe the decrease in our wholesale business in the United States will continue in the fourth quarter, but are cautiously optimistic about the first quarter.”
Read the whole thing at http://footwearnews.com/2016/business/earnings/skechers-earn…
Definitely not what I wanted. Here are the latest numbers:
Net Sales (millions) Q1 Q2 Q3 Q4
2013 515.8 450.7
2014 546.5 587.1 674.3 569.7
2015 768.0 800.5 856.2 722.7
2016 978.8 877.8 942.4
EPS (diluted) Q1 Q2 Q3 Q4
2013 0.18 0.09
2014 0.20 0.23 0.33 0.14
2015 0.37 0.52 0.43* 0.19
2016 0.63 0.48 0.42
*SKX 3-for-1 stock split 10/15/15, but all EPS figures are split-adjusted
2016 Q3 Earnings (Current):
Revenue Growth (millions)
2015 Q3 TTM Revenue = 2994.4
2016 Q3 TTM Revenue = 3521.7
Year Over Year Revenue Growth = 17.6%, previous quarter rev growth 22.15%
EPS Growth (diluted)
2015 Q3 TTM Earnings = 1.46
2016 Q3 TTM Earnings = 1.72
Year Over Year EPS Growth = 17.8%, previous quarter EPS growth 27.2%
P/E (Check Current Price) = 22.94/1.72 = 13.33
1YPEG = 13.33/17.8 = 0.75
The P/E above is calculated using today’s closing price, because I don’t like using AH trading numbers. This is hugely disappointing and I don’t want to sugarcoat anything. But…let’s conservatively say tomorrow’s price drops to $20 (judging by AH trading, it will probably drop by much more). Using $20 as the price, the P/E would only be 11.6. for a stock with revenues continuing going up by low double digits and a basically flat EPS. That still seems really cheap to me, right? Or am I just grasping at straws?
Matt
Long SKX
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Your TTM numbers look good because Q1 showed great growth. It skews the picture to make it look better than it is.
Let’s focus on this last quarter in isolation. From your numbers, looks like a rise of 10% in sales. But this did not move the needle on EPS at all. Is it all due to foreign exchange?
The 10% revenue growth is a ray of light. A business that can grow revenue and earnings at 10% deserves a P/E of 15. At a P/E of 11, tomorrow, this is a 40% discount. However, you need a lot of patience to let this thesis play out.
I don’t think you are missing anything.
Shoe companies normally enjoy an average P/E of 17. At a P/E of 11, the market forecasts a significant reduction in sales and earnings. I don’t think it is that bad.
In any event, too late to sell now. Better to dig in and hope for the best.
Using $20 as the price, the P/E would only be 11.6.
Shoe companies normally enjoy an average P/E of 17. At a P/E of 11, the market forecasts a significant reduction in sales and earnings. I don’t think it is that bad.
SKX has $665m cash and borrowings of just over $70m, if you adjust the Mcap for net cash (enterprise value) the P/E drops below 10 if the S.P ends up around $20.
Unwize
SKX has $665m cash and borrowings of just over $70m, if you adjust the Mcap for net cash (enterprise value) the P/E drops below 10 if the S.P ends up around $20.
Can you operate the company without the cash and the debt? Your calculation would be valid if you could but if the cash and debt are necessary costs of doing business then it is a misleading assumption. It would be valid for an asset play.
Denny Schlesinger
Inventory and AP way too high…compared to revenue