Skechers USA (SKX) Highlighted As Weak On High Volume

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 weak on high relative volume 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 $40.6 million.
  • SKX has traded 184,603 shares today.
  • SKX is trading at 2.97 times the normal volume for the stock at this time of day.
  • SKX is trading at a new low 3.02% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on SKX:

Skechers U.S.A., Inc. designs, develops, markets, and distributes footwear for men, women, and children, as well as performance footwear for men and women under the Skechers GO brand name. SKX has a PE ratio of 29.5. Currently there are 3 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 748,100 shares per day over the past 30 days. Skechers USA has a market cap of $2.5 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 0.75 and a short float of 4.6% with 2.57 days to cover. Shares are up 92.1% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Skechers USA as a buy. 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 the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 11.9%. Since the same quarter one year prior, revenues rose by 37.1%. 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 0.12 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 2.01, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Powered by its strong earnings growth of 385.71% and other important driving factors, this stock has surged by 111.65% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • 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. 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 ($2.55 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 390.6% when compared to the same quarter one year prior, rising from $7.09 million to $34.80 million.

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