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Factors Likely to Decide Skechers' (SKX) Fate in Q1 Earnings

Zacks Equity Research

Skechers U.S.A., Inc. SKX is slated to release first-quarter 2019 results on Apr 18. This renowned footwear designer, marketer and distributor delivered a positive earnings surprise of 34.8% in the last reported quarter. The company outpaced the Zacks Consensus Estimate in three of the trailing four quarters, with the average beat being 5.3%. Let’s see what’s in store for the company this time around.

Skechers U.S.A., Inc. Price, Consensus and EPS Surprise

Skechers U.S.A., Inc. Price, Consensus and EPS Surprise | Skechers U.S.A., Inc. Quote

Which Way are Top & Bottom-Line Estimates Headed?

The Zacks Consensus Estimate for first-quarter earnings stands at 72 cents, reflecting year-over-year decline of 4%. We also note that the Zacks Consensus Estimate has been stable in the past 30 days. The Zacks Consensus Estimate for revenues is pegged at $1,291 million, up approximately 3.3% from the year-ago quarter. We note that total revenues of this CL-based company increased 11.4% in the last reported quarter.

Factors Aiding the Stock

Skechers’ increased focus on new line of products, cost containment efforts, inventory management and global distribution platform are likely to have a favorable impact on quarterly results. Moving on, Skechers’ e-commerce business continues to gain traction.

Moreover, Skechers’ international business remains a considerable sales growth driver for the company with Europe and China being significant markets outside the United States. Skechers is poised to enhance its global reach in the footwear market through its distribution networks, subsidiaries and JVs.

However, rising general & administrative expenses are a concern. This may have a direct bearing on the company’s bottom line. Further, the company remains vulnerable to fashion obsolescence and currency fluctuations.

Nevertheless, management had earlier projected first-quarter 2019 earnings between 70 cents and 75 cents a share compared with 75 cents delivered in the year-ago period. Additionally, the company anticipates first-quarter net sales in the band of $1.275-$1.300 billion compared with $1.250 billion reported in the prior-year quarter.

While providing the guidance, the company considered the existing foreign-exchange headwinds and shift in some sales from the first quarter to the second quarter due to the timing of Easter this year.

What the Zacks Model Unveils

Our proven model does not conclusively show that Skechers is likely to beat estimates this quarter. A stock needs to have both — a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP— for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Skechers has a Zacks Rank #2 and Earnings ESP of 0.00%, which makes surprise prediction difficult.

3 Stocks With a Favorable Combination

Here are three other companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Best Buy BBY has an Earnings ESP of +2.06% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Five Below FIVE has an Earnings ESP of +0.31% and a Zacks Rank #3.

Tiffany TIF has an Earnings ESP of +0.60% and a Zacks Rank #3.

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