Yahoo Finance Skechers U.S.A's (NYSE:SKX) earnings growth rate lags the 14% CAGR delivered to shareholders
It hasn't been the best quarter for Skechers U.S.A., Inc. (NYSE:SKX) shareholders, since the share price has fallen 11% in that time. On the other hand the returns over the last half decade have not been bad. It's good to see the share price is up 89% in that time, better than its market return of 87%.
Since the long term performance has been good but there's been a recent pullback of 3.6%, let's check if the fundamentals match the share price.
See our latest analysis for Skechers U.S.A
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
Over half a decade, Skechers U.S.A managed to grow its earnings per share at 13% a year. This EPS growth is reasonably close to the 14% average annual increase in the share price. This indicates that investor sentiment towards the company has not changed a great deal. Indeed, it would appear the share price is reacting to the EPS.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. Dive deeper into the earnings by checking this interactive graph of Skechers U.S.A's earnings, revenue and cash flow.
A Different Perspective
Skechers U.S.A shareholders are up 14% for the year. But that return falls short of the market. The silver lining is that the gain was actually better than the average annual return of 14% per year over five year. It is possible that returns will improve along with the business fundamentals. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that Skechers U.S.A is showing 1 warning sign in our investment analysis , you should know about...
Skechers U.S.A is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
