Skechers: Solid Growth Trajectory With Reasonable Valuations

Jul. 06, 2022 2:40 PM ETSkechers U.S.A., Inc. (SKX)ADDYY, NKE2 Comments
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  • Skechers' share price was beaten down, yet it is not the worst performing one. Moreover, the recent sell-off made the share trade slightly below its 3-year mean.
  • As the threat of stagflation looms, it is important for investors to choose companies with sound fundamentals: solid top-line growth trajectory, competitive margins, positive cash flows, and reasonable valuations.
  • Despite inflationary pressures, Skechers still recorded a strong revenue growth in 1Q22. Moreover, it also had flexibility in raising prices, which can offset persistently high freight costs.
  • In addition, Skechers had consistently generated positive free cash flows apart from during COVID pandemic.
  • Utilizing an estimated 2023F EPS of US$3.4 per share, we arrive at 12-month fair value estimate of US$46 per share, implying a forward P/E of 13.4x (3-year mean).

White letters logo on Skechers shop

Lubo Ivanko/iStock Editorial via Getty Images


In our last article on Skechers U.S.A., Inc. (NYSE:SKX) titled "What Makes It an Excellent Choice," we mentioned that Skechers is enjoying solid top-line growth thanks to the expansion of its international presence. The

Skechers stock price
Data by YCharts
SKX Stock Price Change (%)

Stock Price Change (%) (Vektor Research, Yahoo Finance)

SKX Forward P/E Band

SKX Forward P/E Band (Vektor Research, Yahoo Finance)

Skechers Revenue Growth (%)

SKX Revenue Growth (%) (Company, Vektor Research)

Skechers Capital Intensity (%)

Capital Intensity (%) (Company, Vektor Research)

Skechers Margins

SKX Margins (Company, Vektor Research)

Skechers vs peers gross profit margin
Data by YCharts

Skechers free cash flow per share
Data by YCharts
Skechers Quarterly Results

Quarterly Results (Company, Vektor Research)

This article was written by

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An independent research that aims to produce in-depth fundamental analysis accessible to all investors. For now, we will cover a group of stocks in within the same sector to provide investors with more comprehensive analysis. At times, however, we will write about companies with wide moats and sold at reasonable prices, those that fall out of favor but still retain a turnaround story, and smaller companies that are not well-known by the market but hold significant upside.

Disclosure: I/we have a beneficial long position in the shares of SKX either through stock ownership, options, or other derivatives. 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.

Additional disclosure: Research reports are written based on analyst(s) analysis and expectations, and the analyst(s) must include sources for external data included in the analysis. The research analyst is not responsible for any inaccuracy caused by human errors. Still, Vektor Research will make sure, with reasonable efforts, to reduce such mistakes as minimal as possible. Please note that the forecasts do not guarantee any future performance. Vektor Research, along with the analyst(s), is not responsible for any loss, expenses, and the reader's decision-making, as we do not force readers to act towards any securities.

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