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Skechers U.S.A., Inc. Message Board

  • mr_nimble_2_you mr_nimble_2_you Feb 5, 2009 4:16 PM Flag

    stock halted preannouce DOWN

    anyone here left to lose money? lol

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    • In the news story, one of the analysts claims to have been predicting this, except he says the results were even worse than he thought.

      He lowered his target from 10 to 7. Some other analyst moves his target from like 15 or so to 6.50. It's hard to take that seriously..... basically he's cutting his after cash valuation to 75 from 500.

      The best thing to do here is trust your own judgement, because analysts will swing wildly out of malice or out of ignorance. These same analysts will be the same ones who raise targets to 25 when trends swing the other way, which they usually do. It wasn't that long ago SKX was 30, and I'm just not smart enough to pick an exact bottom, so I will add here.

    • It's hard to guess what others will think, but with approx $5.33 cash (taking the low end of the cash range, then assume they reduce inventory by 50m at breakeven and then forget the rest of inventory), every dollar it drops is 21.5%.... so a $2.50 drop from the 10 level is a 50%+ haircut in company valuation.

      The cash has worked for me at companies like Apple and Intuitive Surgical... the stocks first drop to a level that make sense based on P/E as all the growth types jump ship, but then rebound when the value investors see the balance sheet and jump in. With Skechers, I thought the valuation below $10 was already very unusual compared to others I looked at (SHOO, FOSL), so it's possible problems were expected. $7.5 would be approx a $100M company valuation... basically 1/12 the sales of Nike at 1/200 the valuation. Skechers results can also be lumpy, so $1 per share earnings is possible and would give a P/E of 2.2 . Cycle normalized earnings might be higher and give a P/E below 2.

      Hopefully this will turn out to not be a Skechers specific problem, or will turn out not to be a problem at all but just a projection of one, but for now I think it will be viewed as a Skechers specific problem.

    • How is inventory valued on their books?? At cost? If so, what you are saying is true.

      They also inceased provisions for non payment by about $0.33 per share... Which lowers EPS - but is proactive in nature.

      Do you expect it to hold $8 or drop closer to $7.5 short term? I think it is undervalued at $8 based on cash level and cash flow (as you stated). I see the next trading range being $8 to $9... Not sure what analysts will say though.

      It would be hard to downgrade from $8 level though... As it seems like they tried to make Q4 their kitchen sink quarter. They still made over $1 in 2008, and should make over $0.50 in 2009. Just being profitable in this market with strong balance sheet is huge.

    • Any guesses on what it trades tomorrow? They have a nice chunk of cash - and are advertising that in the preannouncement.

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