Do not sell Skechers USA, Inc. (NYSE: SKX) before reading this

<p class = "Canvas-Atom Canvas-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "This article is written for those who want to get better at Using Price / Earnings Ratio (P / E): We apply a basic P / E analysis to Skechers USA, Inc. (NYSE: SKX) to determine if the stock is worth further research. How high is Skechers USA’s P / E? Well, based on the past twelve months, it’s 19:56. In other words, at today’s prices, investors pay $ 19.56 for every $ 1 profit in the previous year. “Data-reactid =” 27 “> This article is for those who want to make better use of the price-performance ratio (P / E) We at Skechers USA, Inc. (NYSE: SKX) will apply a basic analysis of the P / E to you to assist in deciding whether the stock is worth further investigation. How high is Skechers USA’s P / E? Well, based on the past twelve months, it’s 19:56. In other words, at today’s rates, investors pay $ 19.56 for every $ 1 profit in the previous year.

<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = " Check out our latest analysis for Skechers USA “data-reactid =” 28 “> Check out our latest analysis for Skechers USA

How do I calculate a price-performance ratio?

<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = "The Formula for P / E is: “data-reactid =” 30 “> The Formula for P / E is:

Price-earnings ratio = share price ÷ earnings per share (EPS)

Or for Skechers USA:

P / E of $ 19.56 = $ 42.57 – $ 2.18 (based on the last twelve months through September 2019)

Is it good value for money?

<p class = "Canvas-Atom-Canvas-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "A higher P / E implies that investors pay a higher price for the profitability of the business. It is neither good nor bad per seHowever, a high P / E implies that buyers are optimistic about the future. “data-reactid =” 35 “> A higher P / E implies that investors pay a higher price for the profitability of the business. It is neither good nor bad per seHowever, a high P / E implies that buyers are optimistic about the future.

Does Skechers USA have a relatively high or low P / E ratio for its industry?

The P / E indicates whether the market has higher or lower expectations of a company. In the illustration below, you can see that the average P / E ratio (18.5) for companies in the luxury sector roughly corresponds to the P / E ratio of Skechers USA.

NYSE: SKX Price Estimation vs. Market, January 11, 2020

NYSE: SKX Price Estimation vs. Market, January 11, 2020

<p class = "Canvas-Atom-Canvas-Text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = "The KGV suggests that Skechers USA is a shareholder I think it will perform about the same as other companies in its industry classification in the future, and if Skechers USA actually does better than its competitors in the future, it should have a positive impact on the stock price Insider buying and sellingcould help you get an idea of ​​whether this is likely. “data-reactid =” 50 “> The KGV suggests that Skechers USA shareholders believe that in the future it will perform roughly the same as other companies in its industry if Skechers USA actually does better than its competitors in the future , this should have a positive impact on the share price Insider buying and selling, could help you form your own opinion as to whether this is likely.

How growth rates affect P / E

The P / E primarily reflects the market expectations regarding profit growth rates. This is because companies that quickly increase earnings per share quickly increase the E in the equation. Even if you pay a high multiple of earnings now, that multiple will be lower in the future. And if the P / E ratio drops, the company will look cheap unless the share price goes up.

<p class = "Canvas-Atom Canvas-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "In the last year Skechers USA grew EPS-like Taylor Swift grew their fan base back in 2010. The 82% growth rate was quick and deserving, and the sweetener is that the 20% annual growth rate over five years is also impressive, so I'd be surprised if the P / E ratio was that high Not above average. “data-reactid =” 53 “> Last year Skechers USA EPS grew like Taylor Swift its fan base in 2010. The 82% increase was both quick and earned. The sweetener is that of the annual five. The annual growth rate of 20% is impressive, so I would be surprised if the earnings were so high Not above average.

Remember: P / E ratios do not take the balance sheet into account

It is important to note that the P / E takes into account market capitalization and not company value. This means that neither debts nor cash are taken into account. Hypothetically, a company could lower its future P / E ratio by spending its cash (or borrowing) to get a higher return.

Such expenses may be good or bad overall, but the key point here is that you need to look at debt to understand the P / E context.

How does Skechers USA’s debt affect the P / E ratio?

Skechers USA has a net cash volume of $ 808 million. This is quite high at 12% of the market capitalization. This could mean that the strength of the balance sheet is important for the company, but it should also help to drive the P / E a little higher than usual.

The Skechers USA P / E ratio

Skechers USA has a P / E ratio of 19.6. This roughly corresponds to the US market average of 18.7. The net cash position is the culmination of the excellent EPS growth. At first glance, we are surprised that Skechers USA has no higher P / E ratio. All the more so as analysts expect further earnings growth. Click here to research this potential opportunity.

<p class = "Canvas-Atom Canvas-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "If the market is wrong about a stock, there is give You experienced investors an opportunity: If the reality for a company is better than expected, you can make money by buying and holding long term free A visual report on analyst forecasts could be the key to making an excellent investment decision. “data-reactid =” 65 “> If the market is wrong with a stock, it offers experienced investors a chance. If the reality for a company is better than you expect, you can make money by buying and holding long term free A visual report on analyst forecasts could be the key to making an excellent investment decision.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Of course You could find a fantastic investment if you look at a few good candidates. So take a look free List of companies with low (or no) debt trading at a P / E ratio below 20. “data-reactid =” 66 “> Of course You could find a fantastic investment if you look at a few good candidates. So take a look free List of companies with low (or no) debt trading at a P / E ratio below 20.

<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = "If you discover an error that justifies a correction, please contact the editorial team at [email protected] This article from Simply Wall St is general in nature. It is not a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Simply Wall St has no position in the stocks mentioned.

We strive to provide you with long-term, focused research analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or quality material. Thank you for reading.“data-reactid =” 67 “>If you discover an error that justifies a correction, please contact the editorial team at [email protected] This article from Simply Wall St is general in nature. It is not a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Simply Wall St has no position in the stocks mentioned.

We strive to provide you with long-term, focused research analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or quality material. Thank you for reading.

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