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Why Skechers (SKX) Stock Is Jumping Higher Today

NEW YORK (TheStreet) -- Shares of Skechers U.S.A., Inc. (SKX - Get Report) are up 1.82% to $35.90 after Meb Keflezighi, an American who endorses Sketchers shoes, won the Boston Marathon.

It's "just a huge leap forward for the entire Skechers performance division, the entire brand as a whole," Rick Higgins, VP of merchandising and marketing at Skechers' performance division, told Bloomberg. "Just having that legitimacy and credibility in that market."

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TheStreet Ratings team rates SKECHERS U S A INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate SKECHERS U S A INC (SKX) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we find that the company's return on equity has been disappointing."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • 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. This trend suggests that the performance of the business is improving. During the past fiscal year, SKECHERS U S A INC increased its bottom line by earning $1.08 versus $0.19 in the prior year. This year, the market expects an improvement in earnings ($1.77 versus $1.08).
  • 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 258.1% when compared to the same quarter one year prior, rising from $3.96 million to $14.17 million.
  • 47.00% is the gross profit margin for SKECHERS U S A INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 3.14% trails the industry average.
  • Powered by its strong earnings growth of 250.00% and other important driving factors, this stock has surged by 64.22% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Textiles, Apparel & Luxury Goods industry and the overall market, SKECHERS U S A INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • You can view the full analysis from the report here: SKX Ratings Report

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