On Friday, Skechers USA Inc. (NYSE:SKX) shares fell sharply in the morning before recovering later for a net intraday gain of 0.61%. The stock had opened high in the pre-market trading. The American footwear company announced its most recent quarterly results Thursday after markets closed, missing analyst expectations.
The company posted FQ3 GAAP earnings per share of $0.66, missing the average analyst estimate of $0.63. On the other hand, revenue for the period increased by 19.2% from FQ3 last year to $1.55 billion, $70 million above estimates.
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The company issued earnings guidance in the range of $2.45 to $2.50 for FY2021, slightly below the consensus Street forecast of $2.54. Its revenue forecast of $6.15 billion to $6.20 billion is relatively in line with Street estimates of about $6.18 billion.
Time to bet on Skechers growth?
From an investment perspective, Skechers offers exciting growth prospects, correctly pointed out by analysts in its defence on Friday.
Although supply chain constraints are expected to affect this year’s earnings resulting in a decline of 76.30%, analysts expect its EPS to grow at an average annual rate of more than 69% over the next five years.
Therefore, given the company’s reasonable valuation multiples of 20.94 P/E and 15.26 forward P/E, it could be time to bet on Skechers’ exciting growth story.
Technically, Skechers shares seem to be trading within an ascending channel formation in the intraday chart. However, the stock pulled back on Friday to trade closer to the support trendline, creating a perfect opportunity for a rebound.
Therefore, with shares yet to reach overbought conditions, investors could target rebound profits at about $49.14, or higher at $51.55, while $43.23 and $40.82 are crucial support levels.
The pullback creates an opportunity
In summary, although Skechers shares are up 32.52% this year, the stock is still down more than 15% from its August highs.
Therefore, given the reasonable valuation and its exciting growth prospects, it could be time to bet on SKX shares.
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