Rising awareness about health and fitness is leading more people to seek active physical fitness conditioning activities. The youth population's interest in exercising and entertainment facilities is also significant.
Besides this, governments of several countries are undertaking initiatives to promote personalized training programs for developing a healthy body and mind, contributing to the market's growth.
As people’s inclination toward sports activities increases, the global sportswear market is expected to grow at a CAGR of 6.7% to reach $305.67 billion by 2030. Amid this, the global sports footwear market is projected to reach $168.92 billion by 2032, exhibiting a CAGR of 5.4%.
Against this backdrop, let’s compare two established athletic stocks to analyze which athletic wear stock is a better fit: Skechers U.S.A., Inc. (SKX) and NIKE, Inc. (NKE).
The Case for Skechers U.S.A., Inc. Stock
With a $9.49 billion market cap, Skechers U.S.A., Inc. (SKX) designs, develops, markets, and distributes footwear for men, women, and children worldwide. The company operates through Wholesale and Direct-to-Consumer segments.
On August 1, 2024, SKX launched a new footwear collection with John Deere. Designed for agricultural professionals, construction workers, outdoor enthusiasts, fashion-minded individuals, and children, the new styles boast the perfect mix of innovation and style.
SKX’s stock has gained 23.4% over the past nine months and 15.7% over the past year to close the last trading session at $61.71.
SKX’s forward EV/EBITDA of 8.95x is 6% lower than the industry average of 9.52x. Its forward EV/Sales multiple of 1.14 is 3.9% lower than the industry average of 1.18.
For the second quarter that ended June 30, 2024, SKX’s sales increased 7.2% year-over-year to $2.16 billion. Its gross profit rose 11.7% over the prior-year quarter to $1.18 billion. Also, net earnings attributable to SKX stood at $140.30 million and $0.91 per share.
Analysts expect SKX’s revenue for the third quarter (ending September 2024) to increase 14.3% year-over-year to $2.31 billion. Likewise, its EPS for the same quarter is projected to grow 25.7% year-over-year to $1.17. Moreover, the company has topped consensus revenue and EPS estimates in three of the trailing four quarters, which is excellent.
SKX’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has a B grade for Value, Sentiment, and Quality. SKX is ranked #2 out of 34 stocks in the Athletics & Recreation industry.
In addition to the POWR Ratings I’ve just highlighted, you can see SKX’s ratings for Growth, Momentum, and Stability here.
The Case for NIKE, Inc. Stock
Valued at $111.91 billion by market cap, NIKE, Inc. (NKE) designs, develops, markets, and sells athletic footwear, apparel, equipment, accessories, and services worldwide. The company provides athletic and casual footwear, apparel, and accessories under the Jumpman trademark; and casual sneakers, apparel, and accessories under the Converse, Chuck Taylor, All Star, One Star, Star Chevron, and Jack Purcell trademarks.
NKE’s stock has gained 1.7% over the past month to close the last trading session at $74.64. However, over the past year, the stock has surged 31%.
NKE’s forward EV/EBIT of 20.62x is 48.5% higher than the industry average of 13.89x.
NKE’s revenues for the fiscal fourth quarter ended May 31, 2024, decreased 1.7% year-over-year to $12.61 billion. In contrast, its gross profit rose marginally year-over-year to $5.63 billion. Additionally, the company’s net income and EPS increased 45.5% and 50% over the year-ago quarter, reaching $1.50 billion and $0.99, respectively.
Analysts expect NKE’s EPS for the quarter ending August 31, 2024, to decrease 43.6% year-over-year to $0.53, while its revenue for fiscal 2026 is expected to increase 5.5% year-over-year to $51.71 billion. It surpassed Street EPS estimates in each of the trailing quarters.
NKE’s mixed fundamentals are reflected in its POWR Ratings. The stock has an overall C rating, translating to Neutral in our proprietary rating system.
NKE has a C grade for Sentiment, Value, Stability, and Momentum. It is ranked #12 among 34 stocks in the same industry.
Click here for the additional POWR Ratings for NKE (Quality and Growth).
NIKE (NKE) vs. Skechers (SKX): Which Athletic Wear Stock is a Better Fit?
The rising popularity of sports as a way to minimize the risk of developing lifestyle diseases and improve physical and mental health is driving the global sportswear market.
Leading athletic companies SKX and NKE stand to capitalize on the optimistic industry outlook. However, SKX’s strong financial performance, lower valuation, and promising near-term outlook favor it as the better athletic stock pick.
Our research shows that the odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the top-rated stocks in the Athletics & Recreation industry here.
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
NKE shares were trading at $78.58 per share on Tuesday afternoon, up $3.94 (+5.28%). Year-to-date, NKE has declined -27.08%, versus a 14.23% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
NIKE (NKE) vs. Skechers (SKX): Which Athletic Wear Stock Is a Better Fit? StockNews.com
