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Factors That Set the Tone for Skechers (SKX) Q2 Earnings

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Skechers U.S.A., Inc. (SKX - Free Report) is slated to release second-quarter 2017 results on Jul 20, 2017. In the trailing four quarters, it had underperformed the Zacks Consensus Estimate by an average of 17.3%. However, the company witnessed a positive earnings surprise of 9.1% in the preceding quarter. Let’s see how things are shaping up prior to this announcement.

What to Expect?

The question lingering in investors’ minds now is whether Skechers will be able to post positive earnings surprise in the second quarter. The current Zacks Consensus Estimate for the quarter under review is 45 cents compared with 48 cents reported in the year-ago period. We note that the Zacks Consensus Estimate has remained stable in the past 30 days. Analysts polled by Zacks expect revenues of $965.7 million, up about 10% from the year-ago quarter.

Skechers forms part of the Consumer Discretionary sector, which occupies a space in the bottom 38% of the Zacks classified sectors (10 out of 16). As per the latest Earnings Preview, total earnings for the sector are expected to decline 1.6%, while revenues are projected to improve 7.8%.

Factors at Play

With greater emphasis on new line of products, cost containment efforts, inventory management and global distribution platform, Skechers remains well positioned to sustain momentum. The company is also enhancing eCommerce platform. However, investors remained apprehensive about Skechers’ bottom-line performance that continued to decline for the fourth successive quarter, when it reported first-quarter results. Moreover, due to high exposure to international markets it remains prone to currency fluctuations.

Management had earlier highlighted that it expects to deliver flat to slightly positive sales for domestic wholesale business, growth in international business and increase in company-owned retail stores. Further, management had forecast second-quarter net sales in the band of $950–$975 million and earnings per share in the range of 42–47 cents.

Skechers U.S.A., Inc. Price, Consensus and EPS Surprise

 

Skechers U.S.A., Inc. Price, Consensus and EPS Surprise | Skechers U.S.A., Inc. Quote

What Does the Zacks Model Unveil?

Our proven model does not conclusively show that Skechers is likely to beat earnings estimates this quarter. A stock needs to have both a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Skechers has an Earnings ESP of 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate both are pegged at 45 cents. The company carries a Zacks Rank #3, which increases the predictive power of ESP. However, its ESP of 0.00% makes surprise prediction difficult.

Stocks with Favorable Combination

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

L Brands, Inc. (LB - Free Report) has an Earnings ESP of +2.38% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Costco Wholesale Corporation (COST - Free Report) has an Earnings ESP of +0.50% and a Zacks Rank #3.

Nordstrom, Inc. (JWN - Free Report) has an Earnings ESP of + 4.92% and a Zacks Rank #3.

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