?Skechers USA (NYSE:SKX) fell almost 8% on Tuesday after an analyst said it may have overestimated demand for its toning shoes, and downgraded the stock to "Sell." From Bloomberg:
Sterne Agee analyst Sam Poser said Skechers has more toning shoes inventory than it can sell as sales of the specialty shoes slow. Poser said he has seen the shoes at discounters Ross Stores Inc. Maxx and Marshall’s, and Costco (NASDAQ:COST),
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On November 20,
Wholesale For Cheap Nike Air Yeezy 2 You Will Find The Latest Styles, we published our own analysis in which we cited that jig was up for toning shoes. We enumerated at that time the reason why we felt the end of this product line was irrelevant in the long run,
Offers You Many High Quality Nike Air Yeezy 2 You Can Save a Lot Here, and noted that ultimately we thought the stock was worth at least $24 per share and probably much more.
Sterne Agee believes the stock’s price will now be harmed until the toning products are essentially in the past. But this says little about the value of the company they are encouraging owners to now sell in our opinion, at precisely the wrong time. We are still not sure what relationship stock and company have to one another we can only reiterate what has already been said: is what you pay, value is what you get. than that,
Buy Real Womens Nike Air Yeezy For Sale Featured Items Are First Come, the two are often distinctly unrelated. The first can be by an irrational mob,
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So at $16 (and that the one year price target), Sterne Agee believes the entire SKX business would be worth about 20% less than its book value today (which is 95.5% tangible assets), and about a 15% discount from its tangible net worth let call it $760 mln. If we assume a modest 2% decline in the value of those old dollars in one year’s time, we can round the value off to $745 mln if the whole company were to be purchased.
Now, Sterne Agee is not predicting a loss of any sort in 2011, so we can only assume that retained earnings and shareholder equity will grow during the exact same time period,
Factory Outlet Online Sale Nike Air Yeezy Red October For Cheap Mens, as it is suggesting an additional 15% decline in share price from its already depressed level. Therefore, if the price does hit $16 per share in one year, on an enlarged equity basis, the actual discount to book suggested would be 25 percent.
To repeat: You would be buying a multi billion dollar established operation that is highly profitable, with great margins, efficiently managed owners equity, and tiny debt for 25% below what is basically tangible equity. It’s like getting the business as a "going concern" for free, since the tangible assets alone might well bring .75/100 in a liquidation situation. Here is what the numbers look like at PT $16.00:Truly, if that price target held true in a year, it would be spectacular. SKX has grown its owners’ equity in aggregate some 21% per annum over the last five years, as we illustrated in our last article here. However, we’re willing to go with it for now.
We are also willing, for the sake of argument, to go with the firm’s revised earnings estimates, which it brought down significantly as part of Tuesday’s call going to a profit of $1.56 a share for fiscal 2011 from a prior view for EPS of $2.37.
Let assume that instead of growing owners’ equity by 21% over the next 12 months, as SKX has done in aggregate over the last five years which included years without shoes it increases owners’ equity by only 10.5%, or half its average track record. In our previous article, we suggested that owners’ equity would be about $1.14 bln within the next 12 months. If we halve the rate of increase in growth form 21% to 10.5%, then we come to a figure of about $1.04 bln. current assets minus all liabilities) that a full $13.34 per share. In addition, the company would then be selling for 39% of 2010 revenues, and if its estimate of $1.56 per share for 2011 is accurate,
Shop For 100% Authentic Nike Air Yeezy Red October For Sale Authentic, the company would still earn $74 mln or about 10% of its market cap., which we think is strong for any enterprise.
Here is where we are left scratching our heads. Stern Agee maintained a "buy" rating on the stock up until this two notch downgrade yesterday. During the time the rating was out, the shares went down 28% year to date, and have dropped more than 50% since hitting a 52 week high of $44.90 on June 21. All this happened before the downgrade, meaning this company (up until Monday) was already at a bargain, and represented a far better value. Stern Agee was saying to buy at much higher prices,
2014 Cheap Nike Air Yeezy 2 For Sale You Can Enjoy Fast Free Shipping, which were probably fair at any rate, but were by no means a screaming bargain. We think it a steal now and they’re saying sell?
If it happens to go to $16, as Stern Agee suggests,
Order Online Womens Nike Air Yeezy 2 Red October Wholesale Online Shop, we would have to add another notch to the rating scale two notches above "buy," where it’s the little known "mortgage your grandmothers house to buy the stock" rating . The $16 price range would be something like a company about to go into bankruptcy, although at that price, the common would almost be covered in liquidation, so we are making a public appeal for anyone who might have knowledge of SKX’s impending bankruptcy to send us an email. In the meantime, we’ll be willing to go the "mortgage." route at about $19. We thought that was shrewd investigative work, explored, and indeed found it to be true. If Stern Agee’s previous rating was wrong (if we are to speak in terms of price performance alone, and not intrinsic value),
Where To Buy Nike Air Yeezy 2 For Sale Extra 50% Off Clearance Items, then isn it possible the rating is also wrong?
It’s a curious thing how those who give advice on matters of the wise investment of capital are often successful at proffering precisely the wrong advice at precisely the wrong time in remarkably consistent fashion,
Sale Online Mens Nike Air Yeezy 2 For Sale Fast Delivery To Your Door, year after year and yet their services are always in demand, and their commentary followed closely. Deckers Outdoor Corp. (NYSE:DECK) and Nike (NYSE:NKE) garner 5 600% premiums over book, and NKE is growing owners’ equity only about half as fast as SKX; due to its size, NKE could not possibly have the same rate of growth potential as the much smaller SKX.
DECK,
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Order Authentic Nike Air Yeezy 2 Red October With Authentic Quality, but we’ve got 50 bucks that says Uggs will be selling about as well as toning shoes in six months. That is what the fashion industry is; that is what it has to be. Obsolescence in clothes is not as great as companies in that industry would like, so things have to come in and out of fashion and then, when new ideas (if any exist) run out, the whole cycle starts over again.
For example, there was once a time when people actually wanted to own and wear the Nike Red Suede Cortez tennis shoe and exchanged authentic government notes for the product. When people no longer wanted to own or wear those shoes, it was hardly Armageddon for the company; it simply went on to design and develop other shoes.
For these reasons, we think it is reasonable to ask in the case of SKX if the crime fits the punishment.
We recently observed something similar to this form of speculator hubris in our article on Western Digital Corp. (NASDAQ:WDC). Not too long ago, when sellers of this issue concluded that, despite 40 years of successful and profitable operations,
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It’s a rather startling suggestion that the management team of WDC (who probably has thought about solid state memory seven days a week, 365 days a year, for years) could not somehow come to the most elementary conclusions: That a new form of memory exists that has some advantages over traditional mechanical storage.
How likely is that scenario? Yet that is precisely what happened. The result was the ability to buy WDC at around $23 when we published our article here. Two months later,
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