Depending who you are, hearing about shoe shopping may excite you, it may cause you to groan or it may not mean much to you at all. I certainly can’t say what investors’ personal thoughts are about shoes, but judging by the Turner Analytics ratings, when investors look at shoe stocks, they’re firmly in the third category. Let’s take a look:
(out of 100)
(out of 100)
(out of 200)
|Skechers USA, Inc. (SKX)||79||62||141|
|Nike, Inc. (NKE)||38||66||104|
|Deckers Outdoor Corp. (DECK)||46||55||101|
|Steve Madden, Ltd. (SHOO)||39||47||86|
|Crocs, Inc. (CROX)||23||55||78|
|Foot Locker, Inc. (FL)||39||10||49|
In some ways, seeing the hold signal across the board surprises me. When I look at these companies individually, there’s a wide range of company results, and several of them have posted good news recently. For example, Sketchers recently beat fourth-quarter sales estimates and met earnings estimates for the same period. And Nike was seen as one of the stocks that helped to lift the Dow in Tuesday’s rally.
I also know that consumers are saving money as gas prices fall, and a lot of the savings are going back into the retail sector. Plus, Millennials (who now make up about a quarter of the adult population in the U.S.) are typically more committed to fitness than the generations before them. One of the most basic components of their healthy lifestyles are the shoes that Nike, Foot Locker and Sketchers can provide. In fact, Sketchers was the title sponsor for the Los Angeles Marathon this month.
However, despite the positive trends some companies are seeing in stores, all six of these stocks are ranked as Holds in the Turner Analytics database. Their Industry (Textile – Apparel Footwear and Accessories) has been declining since August, and all of the companies have been impacted—especially in year-over-year comparisons. SKX is the only position that can offer strong year-over-year revenue growth, and CROX is the only one with strong year-over-year earnings growth.
The consumer spending increase I mentioned above may help these stocks to post strong earnings results again soon, but until both their fundamental and technical scores improve, I recommend holding on all shoe retailers.