On Thursday, an analyst from Williams Trading adjusted the financial outlook for Steven Madden (NASDAQ:SHOO), reducing the stock price target to $39.00 from the previous $44.00, while maintaining a Hold rating on the stock.
The decision follows an evaluation of the company's recent performance, its components, and future prospects, which the analyst believes do not justify the current or historical valuation multiples.
According to the analyst, Steven Madden's trading at a higher forward two-year (FY2) multiple compared to Skechers (SKX), which is currently at a price-to-earnings (P/E) ratio of 13 times, is unwarranted. Skechers has been organically growing its business, increasing estimates, and gaining market share, warranting its Buy rating and $80 price target. In contrast, Steven Madden is trading at a 15.2 times multiple.
Despite maintaining its fiscal year 2024 guidance, the analyst is not convinced that the outlook is necessarily conservative. The entirety of the second quarter revenue beat for 2024 was attributed to the recent acquisition of Almost Famous apparel.
The report highlighted that the core wholesale footwear and direct-to-consumer (DTC) revenue did not meet consensus estimates. The slight increase in the core wholesale footwear business was primarily due to growth in international markets, particularly Europe, and private label sales to the mass channel, while women's branded wholesale revenue saw a decline.
The analyst acknowledges that Steve Madden is a well-managed company but notes that it is currently facing a challenging market environment. Luxury brands are drawing inspiration from products by companies like Birkenstock (NYSE:BIRK) and Crocs (NASDAQ:CROX), complicating Steve Madden's ability to reinterpret fashion trends that are becoming more accessible. However, the analyst commended Steve Madden for its inventory management, stating that the company rarely deals with excess inventory issues.
In other recent news, Steven Madden's financial outlook was adjusted by an analyst from Williams Trading, who reduced the price target to $39.00 while maintaining a Hold rating. The decision comes after an evaluation of the company's recent performance, its components, and future prospects.
Despite maintaining its fiscal year 2024 guidance, the entirety of the second quarter revenue beat was attributed to the recent acquisition of Almost Famous apparel. In contrast, Skechers USA (NYSE:SKX) has been experiencing increasing demand across various channels, regions, and product lines, with Williams Trading maintaining a Buy rating and a steady price target of $80.00.
Skechers USA reported a record $2.16 billion in Q2 sales, marking a 7.2% increase year-over-year, and also achieved over $1 billion in direct-to-consumer sales for the first time. The company also announced a new $1 billion share repurchase plan and increased its full-year sales guidance to between $8.875 billion and $8.975 billion.
Despite supply chain disruptions and economic challenges, Skechers continues to focus on scaling the business for profitable growth and plans to open additional stores worldwide. These are recent developments in the companies.
InvestingPro Insights
Analyzing the real-time data from InvestingPro, Skechers (SKX) presents an intriguing financial profile that complements the analysis of Steven Madden (NASDAQ:SHOO). Skechers is currently trading at a P/E ratio of 17.41, which is slightly above the industry average, but still within a reasonable range considering the company's near-term earnings growth. This aligns with one of the InvestingPro Tips, which highlights Skechers' low P/E ratio relative to its anticipated earnings growth. Additionally, Skechers has demonstrated low price volatility, suggesting a stable investment for shareholders.
From a liquidity standpoint, Skechers' liquid assets surpass its short-term obligations, providing the company with a solid financial cushion. This is particularly relevant given the current market environment where liquidity is a significant factor in assessing a company's resilience. Moreover, with analysts from InvestingPro predicting that the company will be profitable this year, and considering that Skechers has been profitable over the last twelve months, the financial outlook for Skechers appears robust.
On the growth front, Skechers has reported a revenue growth of 8.02% over the last twelve months as of Q2 2024, which may explain the upward earnings revisions from 7 analysts on InvestingPro. With such promising data points, readers interested in a deeper dive can find additional insights and metrics on Skechers, including more InvestingPro Tips, by visiting https://www.investing.com/pro/SKX. Notably, there are 9 additional InvestingPro Tips available that could further inform investment decisions.
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