Back to top

Image: Bigstock

Should Value Investors Buy Skechers (SKX) Stock?

Read MoreHide Full Article

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company to watch right now is Skechers (SKX - Free Report) . SKX is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 14.73 right now. For comparison, its industry sports an average P/E of 24.79. Over the last 12 months, SKX's Forward P/E has been as high as 17.53 and as low as 11.24, with a median of 14.34.

SKX is also sporting a PEG ratio of 0.98. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. SKX's industry currently sports an average PEG of 1.91. Over the past 52 weeks, SKX's PEG has been as high as 2.50 and as low as 0.79, with a median of 1.96.

Finally, investors will want to recognize that SKX has a P/CF ratio of 12.92. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 25.51. Over the past year, SKX's P/CF has been as high as 15.99 and as low as 8.49, with a median of 12.27.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Skechers is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, SKX feels like a great value stock at the moment.

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

Skechers U.S.A., Inc. (SKX) - free report >>

Published in