Skechers U.S.A. (NYSE: SKX) and Rocky Brands (NASDAQ:RCKY) are both consumer discretionary companies, but which is the better investment? We will compare the two businesses based on the strength of their profitabiliy, earnings, institutional ownership, dividends, analyst recommendations, valuation and risk.

Analyst Ratings

This is a summary of current recommendations and price targets for Skechers U.S.A. and Rocky Brands, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Skechers U.S.A. 1 3 8 0 2.58
Rocky Brands 0 2 0 0 2.00

Skechers U.S.A. currently has a consensus target price of $31.00, indicating a potential upside of 10.95%. Rocky Brands has a consensus target price of $12.00, indicating a potential downside of 14.59%. Given Skechers U.S.A.’s stronger consensus rating and higher possible upside, analysts clearly believe Skechers U.S.A. is more favorable than Rocky Brands.

Earnings and Valuation

This table compares Skechers U.S.A. and Rocky Brands’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Skechers U.S.A. $3.82 billion 0.98 $429.82 million $1.44 19.40
Rocky Brands $261.70 million 0.40 $16.11 million $0.37 37.97

Skechers U.S.A. has higher revenue and earnings than Rocky Brands. Skechers U.S.A. is trading at a lower price-to-earnings ratio than Rocky Brands, indicating that it is currently the more affordable of the two stocks.

Dividends

Rocky Brands pays an annual dividend of $0.44 per share and has a dividend yield of 3.1%. Skechers U.S.A. does not pay a dividend. Rocky Brands pays out 118.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Insider and Institutional Ownership

65.0% of Skechers U.S.A. shares are held by institutional investors. Comparatively, 52.1% of Rocky Brands shares are held by institutional investors. 21.7% of Skechers U.S.A. shares are held by company insiders. Comparatively, 8.5% of Rocky Brands shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Risk & Volatility

Skechers U.S.A. has a beta of 0.18, indicating that its share price is 82% less volatile than the S&P 500. Comparatively, Rocky Brands has a beta of 0.56, indicating that its share price is 44% less volatile than the S&P 500.

Profitability

This table compares Skechers U.S.A. and Rocky Brands’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Skechers U.S.A. 5.92% 12.79% 9.35%
Rocky Brands 1.06% 4.03% 2.94%

Summary

Skechers U.S.A. beats Rocky Brands on 14 of the 16 factors compared between the two stocks.

About Skechers U.S.A.

Skechers U.S.A., Inc. is a designer and marketer of Skechers-branded lifestyle footwear for men, women and children, and performance footwear for men and women under the Skechers GO brand name. The Company operates through three segments: domestic wholesale sales, international wholesale sales, and retail sales, which includes e-commerce sales. Its lifestyle brands include Skechers USA, Skechers Sport, Skechers Active and Skechers Sport Active, Skechers Originals, BOBS from Skechers and Mark Nason. Its Performance Brands include Skechers Performance, Skechers Kids and Skechers Work. Its footwear is sold through a range of department stores and specialty retail stores and mid-tier retailers, boutiques, among others. As of February 1, 2017, the Company owned and operated 117 concept stores, 163 factory outlet stores and 134 warehouse outlet stores in the United States, and 101 concept stores, 51 factory outlet stores, and five warehouse outlet stores internationally.

About Rocky Brands

Rocky Brands, Inc. is a designer, manufacturer and marketer of footwear and apparel marketed under a portfolio of brand names, including Rocky, Georgia Boot, Durango, Lehigh, Creative Recreation and the licensed brand Michelin. The Company operates its business through three segments: wholesale, retail and military. In its wholesale segment, the Company distributes its products through a range of distribution channels representing over 10,000 retail store locations in the United States and Canada, as well as in other international markets. Its wholesale channels vary by product line and include sporting goods stores, outdoor retailers, independent shoe retailers, hardware stores, catalogs, mass merchants and uniform stores. In its retail segment, the Company sells its products directly to consumers through its consumer and business direct Websites and its Rocky outlet store. In its military segment, the Company sells footwear under the Rocky label to the United States military.

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