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Are Investors Undervaluing Skechers (SKX) Right Now?

Zacks Equity Research

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

Skechers (SKX) is a stock many investors are watching right now. SKX is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock has a Forward P/E ratio of 12.11. This compares to its industry's average Forward P/E of 23.30. Over the last 12 months, SKX's Forward P/E has been as high as 17.53 and as low as 11.24, with a median of 14.48.

We also note that SKX holds a PEG ratio of 0.81. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. SKX's industry currently sports an average PEG of 1.79. Within the past year, SKX's PEG has been as high as 2.50 and as low as 0.79, with a median of 1.96.

Finally, our model also underscores that SKX has a P/CF ratio of 10.64. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. SKX's current P/CF looks attractive when compared to its industry's average P/CF of 23.84. Over the past year, SKX's P/CF has been as high as 15.99 and as low as 8.49, with a median of 12.33.

These are just a handful of the figures considered in Skechers's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that SKX is an impressive value stock right now.


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