On Jul 26, 2014, Zacks Investment Research upgraded Skechers U.S.A., Inc. (SKX) to a Zacks Rank #1 (Strong Buy) on solid earnings backdrop. Shares of this designer, developer, marketer and distributor of footwear, jumped 8% since second-quarter 2014 earnings announcement on Jul 23.
Why the Upgrade?
For Skechers, 2014 is turning out to be an exceptional year. After a robust first quarter performance, the company yet again came up with stellar second quarter results, and since then has been witnessing rising earnings estimates. The quarterly earnings came in at 68 cents a share that fared significantly better than the Zacks Consensus Estimate of 41 cents and the prior-year quarter earnings of 14 cents on the back of strong top-line growth and effective cost management.
Increased demand for products and their innovation across multiple categories as well as a healthy performance across all revenue channels led to a 37.1% rise in net sales to $587.1 million in the quarter, which handily surpassed the Zacks Consensus Estimate of $505 million.
Skechers is now showing signs of stability, having delivered positive earnings surprise in the three successive quarters — 65.9% in the second quarter of 2014, 84.9% in the first quarter and 64.7% in the fourth quarter of 2013.
With more emphasis on a new line of products, increased backlog, cost containment efforts, inventory management and margin improvement, the company anticipates sustained growth momentum in 2014. We believe Skechers, through its distribution networks, subsidiaries and joint ventures is poised to enhance its global reach in the footwear market.
Following the sturdy results, the Zacks Consensus Estimate for 2014 and 2015 increased by 17% and 11.2% to $2.41 and $2.99, respectively, in the last 30 days.
Other Stocks to Consider
Other stocks worth considering in the retail sector include Citi Trends, Inc. (CTRN) and The Men's Wearhouse, Inc. (MW) both carrying a Zacks Rank #1 (Strong Buy), and Deckers Outdoor Corp. (DECK) holding a Zacks Rank #2 (Buy).