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Will Higher Revenues Drive Skechers' (SKX) Q4 Earnings?

Zacks Equity Research

Skechers U.S.A., Inc. SKX is slated to release fourth-quarter 2019 results on Feb 6. This renowned footwear designer, marketer and distributor reported a negative earnings surprise of 2.9% in the last reported quarter. However, the company boasts a trailing four-quarter positive earnings surprise of 20.4%, on average.

The Zacks Consensus Estimate for fourth-quarter earnings stands at 39 cents, indicating an improvement of 25.8% from the year-ago quarter. We also note that the Zacks Consensus Estimate has remained unchanged in the past 30 days. The consensus estimate for revenues is pegged at $1,247.6 million, suggesting growth of 15.4% from the year-ago reported figure.

We note that total revenues of this California-based company improved 15.1% in the last reported quarter, while earnings grew 15.5%. In the last earnings call, Skechers guided fourth-quarter 2019 earnings per share in the range of 35-40 cents and net sales in the band of $1.225-$1.250 billion.

Factors at Play

Skechers’ enhanced focus on new lines of products, cost-containment efforts, inventory management and global distribution platform are likely to show on fourth-quarter performance. Further, the company's domestic e-commerce business has been contributing to the company’s top line. The company operates e-commerce sites in Chile, Germany, U.K., Spain and Canada.

Certainly, Skechers’ international and direct-to-consumer businesses are primary catalysts. Europe and China are key markets for the company outside the United States. The company’s efforts to expand global reach in the footwear market through its distribution networks, subsidiaries and JVs are likely to have aided net sales in the quarter. In this regard, the joint venture in Mexico with its distribution partner is paying off well.

Amid the aforementioned tailwinds, 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 an earnings beat for Skechers this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Although Skechers carries a Zacks Rank #3, it has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

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:

Zumiez ZUMZ has an Earnings ESP of +0.24% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Nordstrom JWN has an Earnings ESP of +1.43% and a Zacks Rank #2.

Gap GPS has an Earnings ESP of +5.43% and a Zacks Rank #3.

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Skechers U.S.A., Inc. (SKX) : Free Stock Analysis Report
 
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