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Skechers (SKX) Soars 16.6%: Is Further Upside Left in the Stock?

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Skechers SKX shares ended the last trading session 16.6% higher at $51.90. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 7.7% gain over the past four weeks.

Shares of Skechers got a boost following the company’s stellar first-quarter 2021 results that gained from continued demand for comfort products as well as momentum in direct-to-consumer business. Markedly, both the top and the bottom lines not only surpassed the Zacks Consensus Estimate but also improved year over year.

The company posted quarterly earnings of $0.63 per share that handily beat the Zacks Consensus Estimate of $0.49. The bottom line also increased substantially from earnings of $0.32 reported in the year-ago period. The company generated sales of $1,428.4 million that outpaced the Zacks Consensus Estimate of $1,289 million, and increased 15% year over year.

As more people are inoculated and getting comfortable shopping, traffic is increasing across retail stores. Also, the company’s digital business remains robust. Moreover, its international business continued to be a significant sales growth driver with China being the prominent market.

The company also provided second quarter and fiscal 2021 sales and earnings view based on current trends, backlogs and other indicators. Management envisions second-quarter fiscal 2021 sales between $1.45 billion and $1.50 billion and earnings in the band of $0.40-$0.50 per share. Skechers guided fiscal 2021 sales between $5.8 billion and $5.9 billion and earnings in the band of $1.80-$2.00 per share.

Price and Consensus

Price Consensus Chart for SKX
Price Consensus Chart for SKX

This shoe company is expected to post quarterly earnings of $0.32 per share in its upcoming report, which represents a year-over-year change of +172.7%. Revenues are expected to be $1.17 billion, up 60.3% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Skechers, the consensus EPS estimate for the quarter has moved down by 3 cents over the last seven days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on SKX going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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Skechers U.S.A., Inc. (SKX) : Free Stock Analysis Report

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