Skechers Shares Are Marching High: Are You Considering?

Is Skechers USA Inc. SKX part of your portfolio? If not, then this is the right time to add the stock as it looks very promising. Moreover, the underlying factors are capable of carrying the momentum further. The stock sports a Zacks Rank #1 (Strong Buy) and has surged roughly 79% year-to-date, demonstrating its inherent strength. We believe that it could prove to be a solid bet for investors.

Skechers' primary strength is its earnings surprise history. The company has outperformed the Zacks Consensus Estimate in six out of the past eight quarters. In the last four quarters, this developer and distributor of footwear for men, women and children topped the Zacks Consensus Estimate by an average of 58.3%, including an earnings surprise of 17.6% in third-quarter 2014.

Skechers continued its superb financial run in the third quarter as both top and bottom lines beat the Zacks Consensus Estimate, increasing year over year. The improvement came on the back of strong sales across its domestic and international wholesale operations, and company-owned retail businesses.

Adjusted earnings per share of $1.07 topped the Zacks Consensus Estimate of 91 cents while rising substantially from 53 cents in the year-ago period. The company's solid earnings are spreading optimism and leading to a rise in the Zacks Consensus Estimate, which increased 4.2% to $2.72 for 2014 and 6.7% to $3.52 for 2015 in the past 60 days.

Aggressive marketing initiatives, product innovation in multiple categories and healthy performance across all revenue channels led to a 30.7% rise in revenues to $674.3 million in the quarter. This surpassed the Zacks Consensus Estimate of $618 million. The domestic wholesale business marked a revenue increase of 18.5%, while international business revenues surged 60.6% and sales across company-owned retail outlets grew 25%.

With an increased focus on the new line of products, cost containment, inventory management, a global distribution platform and backlogs, the company is confident of sustaining the momentum. Skechers, through its distribution networks, subsidiaries and joint ventures, is poised to expand its global reach in the footwear market, with demand expected to remain strong.

Skechers continues to offer a diversified portfolio of brands that includes a wide range of fashion, athletic, non-athletic and work footwear, at compelling prices. We believe that this multi-brand strategy enables the company to roll out new products without cannibalizing its existing brands and helps to expand the targeted demographic profile of customers.

Other Stocks that Warrant a Look

Other favorably ranked retail stocks that look promising and are expected to continue with their upbeat performance include Columbia Sportswear Company COLM, sporting a Zacks Rank #1, Hanesbrands Inc. HBI and Michael Kors Holdings Limited KORS, both carrying a Zacks Rank #2 (Buy).

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