Skechers USA (SKX) AI Stock Analysis

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Skechers USA

(NYSE:SKX)

70Outperform

Skechers demonstrates strong financial performance with robust revenue and profit growth supported by conservative leverage. However, technical indicators suggest caution with a bearish trend, and challenges such as declining free cash flow and foreign exchange impacts weigh on the stock. While valuation seems reasonable, the absence of a dividend might limit appeal for certain investors.

Positive Factors

Financial performance

FY24 EPS & revenue results respectively beat initial guidance by 8% and 1.9% even with the 4Q24 FX headwinds.

Sales growth

Demand for Skechers remains robust with 4Q24 sales in the Americas increasing 14.2%, driven by a 31% increase in domestic wholesale revenue.

Valuation

The analyst reiterates a Buy rating on Skechers, considering the stock inexpensive at 13-14x P/E with expectations for another year of double-digit sales growth.

Negative Factors

China market risk

Weakness in China is expected to weigh on first-quarter sales growth and operating margin, impacting the overall performance.

Foreign exchange impact

FY25 guidance disappointed due an expected $200M FX revenue headwind, and EPS drag from FX headwinds and the new OECD global minimum tax.

Market reaction

SKX shares are trading down in the aftermarket following a mixed Q4 and a disappointing 2025 outlook.

Skechers USA (SKX) vs. S&P 500 (SPY)

Market Cap

$7.55B

Dividend YieldN/A

Average Volume (3M)2.90M

Price to Earnings (P/E)12.2

Beta (1Y)1.05

Revenue Growth12.11%

EPS Growth19.16%

CountryUS

Employees10,100

SectorConsumer Cyclical

Sector Strength55

IndustryApparel - Footwear & Accessories

Share Statistics

EPS (TTM)4.15

Shares Outstanding130,041,030

10 Day Avg. Volume4,034,315

30 Day Avg. Volume2,896,730

Financial Highlights & Ratios

PEG Ratio0.64

Price to Book (P/B)N/A

Price to Sales (P/S)0.93

Price to Cash Flow (P/CF)9.00

P/FCF Ratio8.80

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$73.40

Price Target Upside48.73% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering11

Skechers USA Business Overview & Revenue Model

Company DescriptionSkechers U.S.A., Inc. designs, develops, markets, and distributes footwear for men, women, and children; and performance footwear for men and women worldwide. The company operates through three segments: Domestic Wholesale, International Wholesale, and Direct-to-Consumer. It offers casual, casual athletic, sport athletic, trail, sandals, boots, and retro fashion footwear for men and women under the Skechers USA, Skechers Sport, Skechers Active, Modern Comfort, Skechers Street, Mark Nason, and BOBS brands; sneakers, casuals, boots, and sandals for boys and girls under the Skechers Mega-Craft, S-Lights, SKECH-AIR, Foamies, Twinkle Toes, Z-Strap, Skechers Stretch Fit, and Skechers Street brands; and technical footwear under the Skechers GOrun, Skechers GOwalk, Skechers GOtrain, Skechers GOtrail, and Skechers GO Golf brands. The company also provides men's and women's slip-resistant and safety-toe casuals, boots, hikers, and athletic shoes; and lifestyle apparel for men, women, and kids. As of December 31, 2021, it operated 4,306 company and third party owned Skechers stores. The company sells its products through department and specialty stores, athletic and independent retailers, boutiques, and online retailers; and through its e-commerce sites, concept stores, and factory and warehouse outlet stores. It also licenses its Skechers brand. Skechers U.S.A., Inc. was incorporated in 1992 and is headquartered in Manhattan Beach, California.

How the Company Makes MoneySkechers USA generates revenue primarily through the sale of its footwear products. The company's revenue streams include wholesale, direct-to-consumer, and international sales. Wholesale revenue is derived from selling products to department stores, specialty retailers, and national chains, while direct-to-consumer sales occur through Skechers' owned retail stores and e-commerce platforms. International sales are a significant contributor to Skechers' earnings, with the company having a strong presence in many global markets. Additionally, the company benefits from strategic partnerships and licensing agreements that help expand its product offerings and market reach. Skechers continues to focus on innovation, marketing, and expanding its retail network to drive growth and profitability.

Skechers USA Financial Statement Overview

Summary

Skechers shows robust financial health with strong revenue growth, improved profitability, and a stable balance sheet. While there are concerns about declining free cash flow, the company maintains a conservative leverage position and efficient equity utilization. Continued focus on operational efficiency and cash flow management will be key to sustaining its growth trajectory.

Income Statement

Very Positive

Skechers has demonstrated strong revenue growth with a 12.15% increase from 2023 to 2024. The Gross Profit Margin improved to 53.18%, indicating efficient cost management. Net Profit Margin also rose to 7.13%, showcasing improved profitability. However, EBIT and EBITDA margins remained stable, suggesting room for operational efficiency improvements.

Balance Sheet

Very Positive

The company's Debt-to-Equity Ratio is 0.39, indicating a conservative use of leverage. Return on Equity improved to 13.52%, reflecting efficient use of equity to generate profits. The Equity Ratio stands at 55.93%, suggesting a strong equity base and financial stability. The balance sheet shows solid fundamentals with manageable debt levels.

Cash Flow

Positive

Free Cash Flow experienced a significant decline of 70.19% from 2023 to 2024, primarily due to higher capital expenditures. The Operating Cash Flow to Net Income Ratio is 1.07, indicating healthy cash generation relative to net income. However, the Free Cash Flow to Net Income Ratio has decreased to 0.42, signaling potential challenges in maintaining free cash flow levels.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
8.97B	8.00B	7.44B	6.29B	4.60B
	Gross Profit
4.77B	4.15B	3.52B	3.10B	2.19B
	EBIT
904.26M	784.79M	392.95M	458.61M	28.25M
	EBITDA
904.26M	968.31M	700.39M	737.76M	276.49M
	Net Income Common Stockholders
639.47M	545.80M	373.03M	741.50M	146.23M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.23B	1.26B	717.90M	894.86M	1.47B
	Total Assets
8.46B	7.55B	6.89B	6.49B	5.81B
	Total Debt
1.83B	1.68B	1.64B	1.66B	2.00B
	Net Debt
710.83M	493.90M	1.03B	865.73M	633.58M
	Total Liabilities
3.64B	3.15B	3.02B	2.95B	3.09B
	Stockholders Equity
4.73B	4.02B	3.57B	3.26B	2.48B
Cash Flow		Free Cash Flow
270.60M	907.44M	-120.67M	-97.52M	21.54M
	Operating Cash Flow
687.39M	1.23B	238.32M	212.15M	331.45M
	Investing Cash Flow
-485.36M	-418.02M	-287.49M	-344.67M	-312.47M
	Financing Cash Flow
-253.46M	-234.68M	-118.06M	-433.92M	533.30M

Skechers USA Technical Analysis

Technical Analysis Sentiment

Negative

Last Price49.35

Price Trends

50DMA

60.36

Negative

100DMA

64.35

Negative

200DMA

64.74

Negative

Market Momentum

MACD

-1.50

Negative

RSI

43.69

Neutral

STOCH

65.26

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SKX, the sentiment is Negative. The current price of 49.35 is below the 20-day moving average (MA) of 54.74, below the 50-day MA of 60.36, and below the 200-day MA of 64.74, indicating a bearish trend. The MACD of -1.50 indicates Negative momentum. The RSI at 43.69 is Neutral, neither overbought nor oversold. The STOCH value of 65.26 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SKX.

Skechers USA Risk Analysis

Skechers USA disclosed 30 risk factors in its most recent earnings report. Skechers USA reported the most risks in the “Macro & Political” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Skechers USA Peers Comparison

Overall Rating

UnderperformOutperform

Sector (59)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CROX	76 Outperform	$5.58B	6.23	57.76%	―	3.53%	24.55%
DECK	76 Outperform	$17.61B	17.79	39.80%	―	19.40%	32.70%
BIRK	75 Outperform	$9.03B	37.41	8.52%	―	20.40%	134.09%
SHOO	74 Outperform	$1.61B	9.41	20.20%	3.79%	15.03%	1.51%
SKX	70 Outperform	$7.55B	12.18	15.42%	―	12.11%	19.16%
WWW	59 Neutral	$999.16M	21.30	15.57%	3.24%	-21.75%	―
Sector *	59 Neutral	$11.76B	10.11	-0.70%	3.92%	1.27%	-16.30%

* Consumer Cyclical Sector Average

Performance Comparison

SKX

Skechers USA

49.35

-6.82

-12.14%

CROX

Crocs

95.50

-30.04

-23.93%

DECK

Deckers Outdoor

109.63

-26.10

-19.23%

SHOO

Steven Madden

21.18

-17.07

-44.63%

WWW

Wolverine World Wide

11.14

2.24

25.17%

BIRK

Birkenstock Holding plc

47.25

4.22

9.81%

Skechers USA Earnings Call Summary

Earnings Call Date: Feb 6, 2025 | % Change Since: -34.74% | Next Earnings Date: Apr 24, 2025

Earnings Call Sentiment Positive

The earnings call reflects a robust performance by Skechers with record revenue and EPS growth, driven by strong expansion into new markets and regions. However, challenges such as a decline in China sales and negative foreign exchange impacts slightly offset these achievements.

Highlights

Record Revenue and EPS Growth

Skechers achieved record sales of over $9 billion, a 13% increase year-over-year, and diluted earnings per share of $4.40, representing a 26% increase.

Strong Fourth Quarter Performance

Fourth-quarter sales reached $2.24 billion with earnings per share of $0.86, driven by 17% growth in wholesale and 8% in direct-to-consumer.

Expansion into New Markets

Skechers expanded into soccer and basketball markets, introduced cricket footwear and apparel in India, and engaged with a roster of elite athletes globally.

EMEA Region Growth

Sales in the EMEA region increased by 25% year-over-year, driven by strength across almost all markets.

Healthy Balance Sheet and Share Repurchase

Maintained a strong balance sheet with $1.38 billion in cash and executed a repurchase of approximately 5.2 million shares.

Lowlights

Decline in China Sales

Sales in China declined by 11% in the fourth quarter due to challenging macroeconomic conditions.

Foreign Exchange Impact

Unfavorable foreign currency changes resulted in a $34.7 million impact on other expenses in the fourth quarter.

Increased Inventory Levels

Inventory increased by 26% year-over-year, attributed to elevated in-transit inventory, especially in EMEA due to shipping delays.

Company Guidance

In the Skechers earnings call, the company provided guidance for fiscal year 2025 with sales projected to be between $9.7 billion and $9.8 billion, despite facing headwinds from foreign currency fluctuations and new global minimum tax regulations. Earnings per diluted share are expected to range from $4.30 to $4.50, with the effective tax rate anticipated to rise to 22-23%. The company plans capital expenditures between $600 million and $700 million, primarily to expand distribution centers in the U.S. and China. For Q1 2025, sales are forecasted to be between $2.4 billion and $2.425 billion, with net earnings per share projected at $1.10 to $1.15.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.