Back to top

Image: Bigstock

Factors Likely to Decide Skechers' (SKX) Fate in Q1 Earnings

Read MoreHide Full Article

Skechers U.S.A., Inc. (SKX - Free Report) is likely to register a decline in the top line when it reports first-quarter 2020 numbers on Apr 23, after the market closes. The Zacks Consensus Estimate for revenues is pegged at $1,225 million, indicating a decline of 4.1% from the prior-year reported figure.

Further, the bottom line is also expected to tumble year over year. We note that the Zacks Consensus Estimate for earnings for the quarter under review has moved down by 40.5% over the past 30 days to 44 cents. The figure suggests a decline of 39.7% from the prior-year quarter.

Notably, the company’s bottom line has outperformed the Zacks Consensus Estimate in two of the trailing four quarters. This renowned footwear designer, marketer and distributor has a trailing four-quarter positive earnings surprise of 11.7%, on average.

Factors at Play

Skechers’ enhanced focus on new lines of products, cost-containment efforts, inventory management and global distribution platform bodes well. Notably, the company's domestic e-commerce business has been contributing to the company’s top line. The company’s efforts to expand global reach in the footwear market through its distribution networks, subsidiaries and JVs is also commendable.

Certainly, Skechers’ international and direct-to-consumer businesses are primary catalysts. However, the outbreak of coronavirus pandemic compelled the company to temporarily close company-owned and third-party owned stores in severely impacted international regions. It also shuttered company-owned stores in North America. Incidentally, management called-off its first-quarter guidance on Mar 18, owing to difficulty in ascertaining the impact of the deadly virus on performance.

Apart from these, concerns related to higher general & administrative expenses, unfavorably currency fluctuations and stiff competition cannot be ignored.

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. price-consensus-eps-surprise-chart | Skechers U.S.A., Inc. Quote

What the Zacks Model Unveils

Our proven model does not conclusively predict a beat for Skechers this earnings season. The odds of a beat increase with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Skechers has a Zacks Rank #5 (Strong Sell) and an Earnings ESP of 0.00%.

3 Stocks With a Favorable Combination

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

Costco (COST - Free Report) has an Earnings ESP of +0.93% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dollar General (DG - Free Report) has an Earnings ESP of +3.52% and a Zacks Rank #3.

Kroger (KR - Free Report) has an Earnings ESP of +11.89% and a Zacks Rank #3.

Breakout Biotech Stocks with Triple-Digit Profit Potential

The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.

Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.

See these 7 breakthrough stocks now>>