3 shoe stocks that could skyrocket as kids go back to school
With nearly 50% of the total United States population fully vaccinated, the Centers for Disease Control (CDC) has urged schools to fully resume classes in person by this fall. The CDC has released a list of guidelines to minimize the spread of the virus, as children under 12 remain ineligible for the vaccine. New York City, which has the largest school system in the country, recently announced that it would not provide a distance learning option this fall with the goal of reopening schools to capacity.
Footwear companies are likely to benefit from these reopening mandates, given the growing demand for outdoor footwear from ages 18 and under.
Thus, we believe that popular shoe companies Adidas AG (ADDYY), Under Armor, Inc. (UAA) and Skechers USA, Inc. (SKX) are expected to see sales skyrocket over the next few quarters, which should push their inventories up.
Adidas AG (ADDYY)
ADDYY is a German company that designs, develops, produces and markets various athletic and sports lifestyle products worldwide. The company offers footwear, clothing, accessories and equipment, as well as golf products under the Adidas and Reebok brands. It sells its products through company-owned retail stores, single-brand franchise stores, wholesale distribution and its e-commerce channel.
On June 16, 2021, ADDYY launched the TechFit Period Proof Tights, which feature an absorbent layer designed to prevent leakage when using a tampon or pad. As the company now focuses more on its female consumers, this product is likely to generate good sales and expand its reach in the market in the coming months.
ADDYY’s net sales for its first fiscal quarter ended March 31, 2021 increased 20.2% year-on-year to 5.27 billion euros ($ 6.26 billion). The company’s gross profit was 2.73 billion euros ($ 3.24 billion), up 25.4% from the previous year. Its operating profit was recorded at 704 million euros ($ 836.67 million), a gain of 1362.6% compared to the same period of the previous year. ADDYY’s net profit was 558 million euros ($ 663.16 million), an improvement of 1,719.7% year-on-year. Its EPS increased 1,547.6% year-over-year to € 2.60 ($ 3.09). The company had cash and cash equivalents of 3.92 billion euros ($ 4.65 billion) as of March 31, 2021.
Analysts expect the stock’s EPS to rise 256.4% for the current year to $ 4.56. ADDYY has beaten Street’s EPS estimates in each of the past four quarters. The consensus estimate of revenues of $ 25.81 billion for the current quarter represents a gain of 8.2% over the period of the previous year. Analysts expect the stock’s EPS to grow at a rate of 5.6% per year over the next five years.
The stock has gained 30.3% in the past year and 17.6% in the past three months. It closed Friday’s trading session at $ 182.05.
It’s no surprise that ADDYY has an overall rating of B, which equates to Buy from our POWR odds system. POWR scores are calculated by considering 118 different factors, each factor being weighted to an optimal degree.
The stock has an A rating for growth and a B rating for momentum, stability and quality. Click here to see the additional ratings for ADDYY value and sentiment.
ADDYY is ranked n ° 15 out of 35 stocks in the A ranking Athletics and recreation industry.
Under Armor, Inc. (UAA)
UAA develops, markets and distributes branded clothing, footwear and accessories for men, women and young people around the world. The Baltimore, MD company sells its products through wholesale channels, independent distributors, specialty retailers, department store chains, leagues and teams, and directly to consumers through brand and factory outlet stores and e-commerce websites.
For its first fiscal quarter, ended March 31, 2021, UAA’s net sales amounted to $ 1.26 billion, an increase of 35.1 percent from the prior year period. The company’s gross profit increased 45.9% year-on-year to $ 628.64 million. Its adjusted operating profit was reported at $ 114 million for the quarter, compared to a loss of $ 121.72 million for the period a year earlier. Its adjusted net income was $ 74.58 million, compared to a loss of $ 151.78 million in the prior year period. Its adjusted EPS was reported at $ 0.16, down from a loss of $ 0.34 in the prior year period. The company had $ 1.35 billion in cash and cash equivalents as of March 31, 2021.
For the current year, analysts expect UAA’s revenue to rise to $ 5.34 billion, an increase of 19.3% from the time of year former. The stock has beaten consensus EPS estimates in each of the past four quarters. Analysts expect UAA’s EPS to grow at a rate of 20% per year over the next five years. UAA has grown 78.6% in the past year and 16.9% in the past six months. It ended Friday’s trading session at $ 20.45.
UAA’s strong fundamentals are reflected in its POWR ratings. The stock has an overall rating of B, which is equivalent to Buy in our proprietary rating system.
The stock has a B rating for growth, momentum and quality. We also rated UAA for value, sentiment and stability. Click here to access all UAA ratings.
UAA is ranked # 23 in the Athletics and recreation industry.
Skechers USA, Inc. (SKX)
SKX designs and markets contemporary casual, active, rugged and lifestyle branded footwear for men, women and children around the world. The company sells its products to department stores, specialty retailers, distributors and directly to consumers through its retail stores. SKX is based in Manhattan Beach, California.
Inspired by the late iconic Japanese designer Kansai Yamamoto, SKX launched its limited-edition Skechers x kansaïyamamoto collection of four fashion sneakers for men and women on July 21 in Japan, North America and Europe. The collection’s distinctive and avant-garde designs are expected to generate good profits in the months to come.
For its fiscal second quarter, ended June 30, 2021, SKX adjusted sales increased 113.7% year-on-year to $ 1.59 billion. The company’s adjusted gross profit was $ 815.90 million, up 118.1% from the prior year period. Its adjusted operating profit was reported at $ 189.40 million, compared to a loss of $ 61.97 million in the prior year period. SKX’s adjusted net income was $ 124.70 million, compared to a loss of $ 74.50 million in the prior year period. Its adjusted EPS stood at $ 0.80, down from a loss of $ 0.48 during the period last year. As of June 30, 2021, the company had $ 1.09 billion in cash and cash equivalents.
A consensus EPS estimate of $ 0.75 for the current quarter, ending September 30, 2021, represents an increase of 42.2% over the previous year period. It has beaten Street’s EPS estimates in three of the past four quarters. Analysts expect SKX’s revenue to improve 26.4% year-over-year for the current quarter to $ 1.64 billion. The stock’s EPS is expected to grow at a rate of 67.2% per year over the next five years.
The stock has gained 81.8% in the past year and 55.7% in the past six months. It ended Friday’s trading session at $ 53.68.
The UAA’s POWR ratings reflect this promising outlook. The stock has an overall rating of B, which is equivalent to Buy in our proprietary rating system.
The stock has an A rating for Sentiment and a B rating for Growth and Momentum. Click here to see additional notes for SKX (value, stability and quality).
SKX is ranked # 11 in the Athletics and recreation industry.
ADDYY stock was trading at $ 188.60 per share on Monday afternoon, up $ 6.55 (+ 3.60%). Year-to-date, ADDYY has gained 3.84%, compared to an 18.02% increase in the benchmark S&P 500 over the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a particular interest in finding market inefficiencies. She is passionate about educating investors so that they can be successful on the stock market. Following…