Skechers (SKX) Stock Gains on 'Favorable' Ruling in Nike Lawsuit
NEW YORK (TheStreet) -- Skechers (SKX) - Get Report stock is up by 3.76% to $28.94 in afternoon trading on Thursday, as the company announces that it has won a "favorable" ruling over Nike's (NKE) Converse regarding Converse's "Chuck Taylor" shoe.
In October of 2014, Converse sued Skechers, alleging that its "Twinkle Toes" and "BOBS" shoe lines infringed upon Converse's" Chuck Taylor" trademarks, according to a statement by Skechers.
On Tuesday, the judge ruled that the product lines do not infringe on Converse's trademarks.
"While we expected this result, we are still very pleased with the Judge's ruling on Twinkle Toes and BOBS," Michael Greenberg, president of Skechers, said in a statement.
Based in Manhattan Beach, CA, Skechers is a designer and marketer of Skechers-branded lifestyle footwear for men, women and children, and performance footwear for men and women under the Skechers GO brand name.
Separately, TheStreet Ratings team rates SKECHERS U S A INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
We rate SKECHERS U S A INC (SKX) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 15.6%. Since the same quarter one year prior, revenues rose by 27.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- SKX's debt-to-equity ratio is very low at 0.08 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, SKX has a quick ratio of 1.78, which demonstrates the ability of the company to cover short-term liquidity needs.
- Powered by its strong earnings growth of 29.01% and other important driving factors, this stock has surged by 40.22% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, SKX should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- SKECHERS U S A INC has improved earnings per share by 29.0% 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. During the past fiscal year, SKECHERS U S A INC increased its bottom line by earning $0.91 versus $0.36 in the prior year. This year, the market expects an improvement in earnings ($1.55 versus $0.91).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Textiles, Apparel & Luxury Goods industry average. The net income increased by 30.3% when compared to the same quarter one year prior, rising from $51.12 million to $66.60 million.
- You can view the full analysis from the report here: SKX
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.