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When Skechers U.S.A., Inc. (NYSE:SKX) announced its most recent earnings (31 March 2019), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Skechers U.S.A has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I've summarized the key takeaways on how I see SKX has performed.
How Did SKX's Recent Performance Stack Up Against Its Past?
SKX's trailing twelve-month earnings (from 31 March 2019) of US$292m has jumped 44% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 12%, indicating the rate at which SKX is growing has accelerated. What's enabled this growth? Let's take a look at if it is merely because of industry tailwinds, or if Skechers U.S.A has seen some company-specific growth.
In terms of returns from investment, Skechers U.S.A has fallen short of achieving a 20% return on equity (ROE), recording 16% instead. Furthermore, its return on assets (ROA) of 6.9% is below the US Luxury industry of 7.7%, indicating Skechers U.S.A's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Skechers U.S.A’s debt level, has declined over the past 3 years from 25% to 14%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 12% to 52% over the past 5 years.
What does this mean?
Though Skechers U.S.A's past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research Skechers U.S.A to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for SKX’s future growth? Take a look at our free research report of analyst consensus for SKX’s outlook.
- Financial Health: Are SKX’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2019. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.