Check Out Skechers' (SKX) Probability To Beat In Q4 Earnings

Skechers U.S.A., Inc. (NYSE:SKX) is slated to release fourth-quarter 2018 results on Feb 7. This renowned footwear designer, marketer and distributor delivered a positive earnings surprise of 13.7% in the last reported quarter. The company has outpaced the Zacks Consensus Estimate in three of the trailing four quarters, with average beat of 11.9%. Let’s see what’s in store for the company this time around.

Which Way are Top & Bottom-Line Estimates Headed?

The Zacks Consensus Estimate for earnings in the quarter under review stands at 24 cents, reflecting year-over-year growth of 14.3%. We also note that the Zacks Consensus Estimate has gone up by a penny in the past 30 days.

The Zacks Consensus Estimate for revenues is $1,097 million, up approximately 13% from $971 million in the year-ago quarter. We note that total revenues of this New York-based company increased 7.5% in the last reported quarter.

Skechers U.S.A., Inc. Price and EPS Surprise

Factors Aiding the Stock

Skechers’ increased focus on its new line of products, cost-containment efforts, inventory management and global distribution platform are likely to have a favourable impact on the company’s quarterly results. Moving on, Skechers’ e-commerce business continues to gain traction.

Moreover, Skechers’ international business remains a considerable sales growth driver for the company, with Europe and China being significant markets outside the United States. Skechers is poised to enhance its global reach in the footwear market through the company’s distribution networks, subsidiaries and JVs.

Management expects its international distributor business to be up in high single-digits, while the international subsidiary and joint-venture business will likely improve in double-digits during the final quarter.

However, analysts remained concerned about the sluggish performance of the domestic wholesale business. We note that Skechers’ domestic wholesale revenues had fallen 3% year over year in the third quarter, following a decline of 7% in the prior quarter. Further, rising general & administrative expenses are a concern. This may have a direct bearing on the company’s bottom line.

Nevertheless, management projects fourth-quarter 2018 adjusted earnings between 20 cents and 25 cents a share compared with 21 cents delivered a year ago. Additionally, the company anticipates net sales of $1,100-$1,125 million compared with $970.6 million reported in the prior-year quarter.

What the Zacks Model Unveils

Our proven model conclusively shows that Skechers is likely to beat estimates this quarter as the stock has the right combination of the two key ingredients — a positive Earnings ESP and a favourable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Skechers has an Earnings ESP of +9.09% and a Zacks Rank #3.

Other Stocks With Favorable Combination

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

Planet Fitness (NYSE:PLNT) has an Earnings ESP of +11.86% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

YETI Holdings (NYSE:YETI) has an Earnings ESP of +10.33% and carries a Zacks Rank of 3.

Nike (NYSE:NKE) has an Earnings ESP of +8.37% and holds a Zacks Rank of 3.

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