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Bear of the Day

SKECHERS USA, Inc. (SKX - Free Report) has fallen to a Zacks Rank #5 (Strong Sell) after its second quarter earnings miss. The analysts are bearish, and have been lowering estimates for 2016 and 2017.

SKECHERS makes footwear for men, women and children. It sells in the United States and over 160 countries worldwide. It operates 1545 SKECHERS company-owned stores and also sells through department and specialty stores as well as on the Company's e-commerce website.

An Earnings Miss in Q2

On July 21, Skechers reported second quarter results and missed on the Zacks Consensus Estimate by 3 cents. Earnings were $0.48 versus the consensus of $0.51.

However, net sales rose to $877.8 million from $800.5 million the year before. Gross profit also rose to 47.4% of net sales from 46.8% a year ago.

The quarter was boosted by the international business, which accounted for 41.9% of total sales in the quarter.

Sales in the domestic wholesale business were pulled forward from April into March which reduced shipments in April. That led to a sales decrease of 5.4% in the second quarter.

The shifting between quarters still left the company with a 6-month increase in domestic sales of 3.2%.

Emphasis on International

International expansion continues unabated with new store openings. It opened 144 SKECHERS stores in the second quarter bringing the total to 1548 with 1144 of those outside the United States.

It will be opening its first retail stores in Uruguay, Paraguay, Botswana and Sri Lanka before the year is out.

Estimates Cut

It wouldn't be unusual for analysts to adjust full year earnings after an earnings miss. But the analysts didn't just adjust for the 3 cent second quarter miss. The cuts were bigger.

The Zacks Consensus Estimate for 2016 fell to $1.81 from $2.11 in the last 60 days, as 4 estimates were lowered.

2017 also saw cuts. The Zacks Consensus fell to $2.05 from $2.53.

However, it's not all doom and gloom as that's still 19.7% earnings growth for 2016 and 13.6% for 2017.

Shares Weak

Shares sunk on the earnings report and are well off their 2-year high.

But they're also pretty cheap, with a forward P/E of just 13.2.

Remember, the Zacks Rank is a short term recommendation of 1 to 3 months predominately based on analyst earnings revisions.

For the near term, the Rank is bearish on Skechers but if you're a value investor, you might want to keep an eye on it.

If you're looking for a athletic shoe stock that has a high rank, consider Adidas (ADDYY - Free Report) . It's a Zacks Rank #1 (Strong Buy). The analysts have been revising estimates higher in the last 30 days.

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