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Skechers (SKX) to Report Q2 Earnings: What Awaits the Stock?

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Zacks Equity Research
·3 min read
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Skechers U.S.A., Inc. SKX is likely to register a decline in the top line when it reports second-quarter 2020 numbers on Jul 23, after the market closes. The Zacks Consensus Estimate for revenues is pegged at $681.7 million, indicating a decline of 45.8% from the prior-year reported figure.

Further, the Zacks Consensus Estimate for second-quarter bottom line slipped to a loss of 65 cents from a loss of 62 cents over a month. The company had reported earnings of 49 cents a share in the year-ago period.

Notably, the company’s bottom line has outperformed the Zacks Consensus Estimate in the last reported quarter. This renowned footwear designer, marketer and distributor has a trailing four-quarter earnings surprise of 12.1%, on average.

Factors to Note

Skechers’ enhanced focus on new lines of products, cost-containment efforts, inventory management and global distribution platform bodes well. Notably, the company's e-commerce business has been contributing to its top line. The company’s efforts to expand global reach in the footwear market through its distribution networks, subsidiaries and JVs is also commendable. Certainly, Skechers’ international and direct-to-consumer businesses are primary catalysts.

However, the outbreak of coronavirus pandemic led to the temporarily closure of stores in both domestic and international regions. This is likely to have impacted the company’s top line performance in the quarter to be reported. Apart from these, concerns related to higher general & administrative expenses, unfavorable currency fluctuations and stiff competition cannot be ignored.

Nonetheless, we note that on its last earnings call, management informed that almost all its stores in China had begun operations.

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. Price, Consensus and EPS Surprise

Skechers U.S.A., Inc. price-consensus-eps-surprise-chart | Skechers U.S.A., Inc. Quote

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Skechers this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Skechers carries a Zacks Rank #3 and an Earnings ESP of +28.83%.

Other Stocks With a Favorable Combination

Here are some other companies that you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this time around:

Big Lots BIG has an Earnings ESP of +11.8% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Best Buy BBY has an Earnings ESP of +44.52% and a Zacks Rank #3.

Costco COST has an Earnings ESP of +0.76% and a Zacks Rank #3.

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