Analysts see Skechers earnings growth over the next two years at around 13% per year. For Nike, that figure stands around 9% compounded growth. UAA is around 8% and LULU is around 11%. So Skechers is expected to grow earnings at a faster pace than its peers, yet SKX stock trades a significant discount.
I like that setup from a relative valuation standpoint. From an absolute valuation perspective, the pairing of good growth prospects (13%) with a low buy-in multiple (12.4-times) should result in strong SKX stock price appreciation over the next several months.
Bottom Line on SKX Stock
SKX stock is cheap. It looks like Skechers just had a big quarter. The stock is significantly off its recent $30 high. The setup looks compelling for SKX stock to soar on a good report.
It also gives me confidence that the CEO bought a whole bunch of SKX stock (500,000 shares) back in November 2016. His average purchase price of around $22 per share isn’t too far below where SKX stock currently trades. I like being aligned with management, especially at a similar cost basis.
All in all, I like SKX stock here. I think it’s a buy into the report, and maybe even a better buy if the stock drops on Friday.
As of this writing, Luke Lango was long SKX stock.