Skechers: Undervalued And Gaining Market Share

Summary

• I estimate Skechers' intrinsic value at $12B or $80 per share, with revenue doubling to $18B by 2035, assuming improved operating margins and significant reinvestment.
• The footwear industry is mature with low growth, but Skechers gains market share by offering quality footwear at lower prices compared to premium brands.
• Skechers' 2024 revenue grew 12.1%, driven by EMEA and wholesale growth. DCT is trailing in growth but remains important as it stands out with 66% gross margins.
• I estimate that growth will continue at a lower trajectory, and investors will see increased returns after SKX breaks $1B in operating income.
• SKX is part of the outperforming peer group in the last 2 years, and investors may want to consider diversifying with some of the growth names like ONON or DECK.

popovaphoto

Two years after my positive rating of Skechers U.S.A. (NYSE:SKX), the company’s revenues rose from $7.44B to $8.97B, a 20% total increase. Skechers outperformed my past model, where I estimated revenues of $8B in 2024. Likewise, it has increased its

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such 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.