Skechers: A Look at its Intrinsic Value and Growth Potential
Estimating Skechers’ Intrinsic Value
As an investor, it is crucial to determine the intrinsic value of a company before making any investment decisions. In the case of Skechers, I estimate its intrinsic value at $12B or $80 per share. This estimation takes into account the company’s potential for growth and profitability in the coming years.
Growth Potential: Doubling Revenue by 2035
Looking towards the future, I foresee Skechers doubling its revenue to $18B by 2035. This ambitious goal is based on the assumption of improved operating margins and significant reinvestment in the company. Despite the mature nature of the footwear industry with low growth prospects, Skechers has been able to gain market share by offering quality footwear at lower prices compared to premium brands.
Recent Performance and Growth Drivers
In 2024, Skechers’ revenue grew by 12.1%, driven primarily by growth in the EMEA region and through wholesale channels. This indicates that the company is on the right path towards achieving its revenue doubling goal. On the other hand, Direct-to-Consumer (DTC) sales are trailing in growth but remain crucial for the company, standing out with impressive 66% gross margins.
Impact on Investors
For individual investors, the estimation of Skechers’ intrinsic value and potential for revenue growth can serve as a valuable insight into the company’s future performance. By understanding the growth drivers and market positioning of Skechers, investors can make informed decisions on whether to invest in the company.
Global Implications
From a global perspective, Skechers’ growth potential and market share gains in the footwear industry can have significant implications. The company’s ability to offer quality footwear at lower prices compared to premium brands not only attracts customers but also puts pressure on competitors to innovate and improve their products and pricing strategies.
Conclusion
In conclusion, Skechers’ intrinsic value estimation and growth potential paint a positive picture for the company’s future. With a focus on improving operating margins, increasing revenue, and gaining market share, Skechers is well-positioned to continue its success in the footwear industry. As investors and industry observers, it is important to closely monitor the company’s performance and growth trajectory to capitalize on potential opportunities.
