Insiders And Institutions Buy Skechers U.S.A.

March 21, 2022 by Thomas Hughes

Is The Bottom In For Skechers U.S.A, Inc?

The insiders and institutions are buying Skechers U.S.A (NYSE: SKX) and may have put a bottom in share prices. While the trend in insider activity over the past year has been bearish the most recent and last two transactions signal a change in sentiment. The company’s president Michael Greenberg purchased $3.85 million worth of the shares bringing total holdings of insiders and large shareholders to nearly 26%. This may have been a move to shore up price action but we don’t think so, the company’s results and outlook along with institutional interest suggest to us the stock is undervalued.

The institutional activity over the past year has been noticeably different from the insider activity. Institutional activity has been net-bullish for the last 6 quarters with a full 10% of the stock acquired over the past 4 quarters. Activity is on the upswing in Q1 as well, with $194 million worth of the stock purchased in the first 10 weeks of the quarter. This brings total institutional ownership up to nearly 80% and makes this one tightly held issue. In our view, with guidance positive and headwinds expected to subside, we see upside risk in the guidance and a high probability the institutions will keep buying the stock.

And the analysts? The 10 analysts rating the stock have a consensus rating of firm Buy with a price target of $56. This price target is up in the 12 months and 90-day comparison and worth about 41% of upside for shareholders. There have been no commentaries since the last earnings report which is surprising given the strong nature of the guidance.

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Skechers U.S.A. Falls On Strong Results, Guidance

Price action in Skechers U.S.A. initially moved higher in the wake of the earnings report but eventually fell to a new low. The new low is driven by broad market sentiment, however, and not the company’s results or guidance which are very positive. The company reported Q4 revenue and earnings well above the consensus, driven by strength in all segments. The company also reported a small 30 basis point contraction in the gross margin that was more than offset by a wider operating margin. The operating margin increased by 660 basis points to drive $1.65 in EPS which also beat the consensus. As for the guidance, the company is expecting revenue in a range with $1.675 billion as the low end compared to the then consensus of $1.59 billion. The consensus has since moved up to $1.70 billion which is the midpoint of the guidance range and should be an easy bar to clear.

Skechers Announced Buyback Program

Skechers U.S.A. doesn’t pay a dividend but it does return capital to shareholders in the form of buybacks. The company announced a new $500 million dollar repurchased allotment with the Q4 results and we expect to see that repurchases have already begun. The $500 million is worth about 8% of the market cap with shares trading near $39.50 and should be supportive of price action over the next 3 years.

The Technical Outlook: Skechers Might Be At A Bottom

Price action in Skechers might be at the bottom but we aren’t calling it yet. While the price action has rebounded from the recent low it is still below a key support-now-resistance line that may cap gains going forward. Worse, the recent consolidation looks like a bearish triangle that could take the price down to the $25 level if a new low is set. In our view, Skechers could be at a bottom but has yet to form one but when and if it does we’d be interested, assuming there are no changes to the outlook for this shoe company.

Insiders And Institutions Buy Skechers U.S.A.

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Companies in This Article:

Company	Current Price	Price Change	Dividend Yield	P/E Ratio	Consensus Rating	Consensus Price Target
Skechers U.S.A. (SKX)	$62.96	-0.8%	N/A	15.51	Moderate Buy	$78.09

About Thomas Hughes

[email protected]

Experience

Thomas Hughes has been a contributing writer for InsiderTrades.com since 2019.

Areas of Expertise

Technical analysis, the S&P 500; retail, consumer, consumer staples, dividends, high-yield, small caps, technology, economic data, oil, cryptocurrencies

Education

Associate of Arts in Culinary Technology

Past Experience

Market watcher, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights.