It's been a good week for Skechers U.S.A., Inc. (NYSE:SKX) shareholders, because the company has just released its latest annual results, and the shares gained 5.7% to US$39.51. Results overall were respectable, with statutory earnings of US$2.25 per share roughly in line with what analysts had forecast. Revenues of US$5.2b came in 2.1% ahead of analyst predictions. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
After the latest results, the eleven analysts covering Skechers U.S.A are now predicting revenues of US$5.73b in 2020. If met, this would reflect a decent 9.4% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to expand 12% to US$2.53. Yet prior to the latest earnings, analysts had been forecasting revenues of US$5.59b and earnings per share (EPS) of US$2.54 in 2020. So it looks like there's been no major change in sentiment following the latest results, although analysts have made a slight bump in to revenue forecasts.
It may not be a surprise to see that analysts have reconfirmed their price target of US$47.08, implying that the uplift in sales is not expected to greatly contribute to Skechers U.S.A's valuation in the near term. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Skechers U.S.A at US$52.00 per share, while the most bearish prices it at US$37.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Skechers U.S.A shareholders.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. We would highlight that Skechers U.S.A's revenue growth is expected to slow, with forecast 9.4% increase next year well below the historical 14%p.a. growth over the last five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 7.1% next year. Even after the forecast slowdown in growth, it seems obvious that analysts still thinkSkechers U.S.A will grow faster than the wider market.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Skechers U.S.A analysts - going out to 2023, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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.
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