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Skechers Is Hitting Its Stride And Has Upside

Apr. 10, 2021 5:58 AM ETSkechers U.S.A., Inc. (SKX)11 Comments


  • Skechers should see robust growth this year, as physical retail re-emerges and as consumers seek outdoor activities.
  • It has seen fast growth in China and is making capital investments in distribution centers to drive scale and efficiency.
  • I also highlight the valuation, balance sheet, and risks worth considering.

Skechers Shoes Ordered To Pay Out 40 Million Dollar Settlement
Photo by Justin Sullivan/Getty Images News via Getty Images

Value investors understand that investing isn't a popularity contest, and that opportunities are often found in fly-under-the-radar plays. This brings me to Skechers USA (NYSE:SKX), which has performed well since

This article was written by

Gen Alpha profile picture

I am Gen Alpha. I have more than 14 years of investment experience, and an MBA in Finance. I focus on stocks that are more defensive in nature, with a medium- to long-term horizon.

I provide high-yield, dividend growth investment ideas in the investing group Hoya Capital Income Builder. The group helps investors achieve dependable monthly income, portfolio diversification, and inflation hedging. It provides investment research on REITs, ETFs, closed-end funds, preferreds, and dividend champions across asset classes. It offers income-focused portfolios targeting dividend yields up to 10%. Learn more.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (11)

@Gen Alpha your article was right on target. My comments were not directed at you.
Gen Alpha profile picture
@Nevin_S thank you for clarifying. I strive to cover all the salient points. Have a good day.
Regarding valuation - I think you have to take several things into account before pronouncing multiple x, y or z is appropriate.

First, I think you have to look at what value the "brand" has because as we see across the retail spectrum brand translates into sales with less marketing cost which translates into margin. (and for you nay-bobs that say that Skechers is not a valued brand just start your own shoe company and see if you can find anyone who will sell your product let alone customers who will purchase it)

Second, I think you need to look at the footprint of this company which has expanded to nearly every corner of the globe in recent years because this gives them the platform from which to leverage sales (move new styles and products thru the sales channel).

Third, I think you have to look at the balance sheet. You'd be hard pressed to find another soft goods brand name company with a better balance sheet. In fact I can't find another company in this space (not shoes but all clothing) that is this well capitalized. Why is this important? Look at all the other retailers that have gone into bankruptcy over the last year. How are their shareholders doing?

So assigning a multiple to a company is not only a function of how fast they are growing earnings but also a function of how well they are run and how well they are capitalized.
Gen Alpha profile picture
@Nevin_S Good points, however, I did cover those items you mentioned. Otherwise, my article would have been limited to just the valuation section and that would be it. There's no need to reiterate every qualitative point in the valuation section as those points are already a given.
The reason to buy skechers stock is the same as the reason to buy their shoes: they are the most comfortable and well-made leisure shoes on the market.
Allinvestor profile picture
Rather aggressive P/E multiple that you assign there in my opinion as the 2011-2015 years are not very representative of go-forward growth rates. In fact, earnings were negative in 2011 and very low in 2012, creating quite a skew on your blue "Normal P/E" line. I think since 2015 the stock has on average been trading at more like a 15-17x multiple. In my view the stock is therefore already trading in line with FY22 expected earnings and could be considered a trim above $45-$50 if you see better opportunities in the market (which is admittedly tough at the moment).

Long SKX, but not seeing an attractive entry point here.
From your Lips to Gods Ears.......This stock has been a dog for 2-3years .......so I am still holding it.The profit on SKXX stock has been a bust!
SKX has the history of high volatility at low valuation, making it a safe candidate for short term trades and option play. I made more money from SKX than from any other stock.
@dhdu Did something similar with $BGS over the years. Hold for the [then 11% dividend], and or sell at a higher price, sometimes both in a couple short months.
WiseGuyInvestin profile picture
At a 26x p/e the stock would be $86 by 2023 so why would you sell at $50?
Gen Alpha profile picture
@WiseGuyInvestin I stated that “I see potential for SKX to reach $50.” That’s my price target for the near term. How did you go from that to thinking it is a sell at $50?
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