Trade-Ideas: Skechers USA (SKX) Is Today's

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Skechers USA ( SKX) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Skechers USA as such a stock due to the following factors:

  • SKX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $18.1 million.
  • SKX has traded 520,157 shares today.
  • SKX is up 3.2% today.
  • SKX was down 5.4% yesterday.

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More details on SKX:

Skechers U.S.A., Inc. engages in the design, development, marketing, and distribution of footwear for men, women, and children. It operates through four segments: Domestic Wholesale Sales, International Wholesale Sales, Retail Sales, and E-commerce Sales. SKX has a PE ratio of 51.0. Currently there are 4 analysts that rate Skechers USA a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Skechers USA has been 611,700 shares per day over the past 30 days. Skechers USA has a market cap of $1.1 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 0.28 and a short float of 8.7% with 4.45 days to cover. Shares are up 57.2% year to date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Skechers USA as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from the ratings report include:
  • SKX's revenue growth has slightly outpaced the industry average of 6.5%. Since the same quarter one year prior, revenues rose by 11.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • SKX's debt-to-equity ratio is very low at 0.15 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 2.24, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 47.87% 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 1.65% trails the industry average.
  • Powered by its strong earnings growth of 450.00% and other important driving factors, this stock has surged by 68.53% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. 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.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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