Society's increasing focus on health and wellness has created a cultural shift that benefits the athletic industry. People are investing more in their well-being, engaging in sports and fitness activities, and adopting healthier lifestyles. This trend presents a long-term opportunity for athletic companies as they cater to evolving consumer preferences.
Against this backdrop, it could be a wise choice to scoop up the shares of fundamentally sound stocks Skechers U.S.A., Inc. (SKX), Malibu Boats, Inc. (MBUU), and Gaia, Inc. (GAIA) this month.
Primarily fuelled by ongoing innovations and swift technological advancements aimed at meeting evolving consumer preferences, the size of the global sports equipment market is projected to grow at a CAGR of 6.4% from 2022 to 2030.
Moreover, the global athletic footwear market is anticipated to reach $462.08 billion by 2030, exhibiting a remarkable CAGR of 15.4% during the period from 2023 to 2030, while the global sportswear market is expected to reach $267.61 billion in 2028, growing at a CAGR of 6.6%.
The above dynamics collectively contribute to the positive outlook and immense potential for the global athletics market in the coming years. With that being said, let us evaluate the fundamentals of the featured stocks in detail.
Skechers U.S.A., Inc. (SKX)
SKX designs, develops, markets, and distributes footwear for men, women, and children worldwide. The company operates through two segments; Wholesale and Direct-to-Consumer. It offers products under the Skechers USA, Skechers Sport, Skechers Active, Modern Comfort, etc.
On April 27, SKX announced that it had entered into an agreement to acquire Sports Connection Holding ApS, its current distributor in the Scandinavian region. The acquisition is expected to expand SKX’s presence in Europe by leveraging the Sports Connection team's local expertise and benefit from the company’s global capabilities.
On February 23, SKX partnered with fashion industry icon Diane von Furstenberg for an exciting collaboration in footwear and apparel. This global launch of Skechers x DVF offers a unique blend of fashion and comfort to customers worldwide.
“Featuring the instantly recognizable Diane von Furstenberg aesthetic on our best-selling styles will generate excitement for fashion-minded consumers around the globe,” said Kathy Kartalis, Senior Vice President of Global Product for SKX.
SKX’s sales increased 10% year-over-year to $2 billion in the first quarter (ended March 31, 2023), while its gross profit rose 18.7% from the year-ago value to $978.58 million.
Net earnings attributable to SKX grew 32.4% and 32.5% from the prior-year quarter to $160.44 million and $1.02 per share, respectively. Also, its earnings from operations increased 27.1% from the year-ago value to $223.58 million.
Street expects SKX’s revenue and EPS for the third quarter (ending September 2023) to increase 10.6% and 68.8% year-over-year to be $2.08 billion and $0.93, respectively. Moreover, it surpassed the revenue estimates in each of its trailing four quarters and EPS estimates in three out of the trailing four quarters, which is impressive.
Its revenue increased at a CAGR of 13.6% over the past three years. Its EBIT and EPS have improved at CAGRs of 14.4% and 12.3% over the same period, respectively.
SKX’s shares have gained 39.9% over the past nine months and 20.3% over the past six months to close the last trading session at $51.99.
SKX’s POWR Ratings reflect this robust outlook. The stock has an overall B rating, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has a B grade for Sentiment. In the 39-stock Athletics & Recreation industry, it is ranked #6. To see additional POWR Ratings of SKX for Growth, Value, Momentum, Stability, and Quality, click here.
Malibu Boats, Inc. (MBUU)
MBUU designs, engineers, manufactures, markets, and sells a range of recreational powerboats. It operates through three segments: Malibu; Saltwater Fishing; and Cobalt. The company provides performance sport boats, and sterndrive and outboard boats under the Malibu, Axis, Pursuit, Maverick, Cobia, Pathfinder, Hewes, and Cobalt brands.
MBUU’s net sales increased 9% year-over-year to $375.12 million in the fiscal 2023 third quarter (ended March 31, 2023), while its gross profit rose 1.5% from the year-ago value to $98.57 million.
The company’s adjusted fully distributed net income and adjusted fully distributed net income per share of class A common stock amounted to $55.35 million and $2.59, respectively, in the same period. Also, its adjusted EBITDA came in at $79.27 million for the same period.
The consensus EPS estimate of $8.52 for the fiscal year 2023 (ending June) represents a 7.7% improvement year-over-year. The consensus revenue estimate of $1.34 billion for the ongoing fiscal year represents a 10.6% increase from the same period last year.
Also, it surpassed the revenue and EPS estimates in each of its trailing four quarters, which is excellent.
In addition, its revenue and EBIT have grown at CAGRs of 23.4% and 29.2% over the past three years, respectively, while its net income has improved at a CAGR of 31.5% in the same period.
The stock has gained 1.9% year-to-date and 4.1% intraday to close the last trading session at $54.30.
MBUU’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which equates to Buy in our proprietary rating system.
It has a B grade for Value. Within the 39-stock Athletics & Recreation industry, it is ranked #7. Click here to see MBUU’s ratings for Growth, Momentum, Stability, Sentiment, and Quality.
Gaia, Inc. (GAIA)
GAIA is a digital video subscription service and online community for the underserved member base internationally. The company's network includes a Yoga channel, which provides access to yoga, eastern arts, and other movement-based classes, and a Transformation channel that offers content in the areas of spiritual growth, personal development, consciousness, etc.
On February 8, GAIA introduced two new original series: Channeling: A Bridge to the Beyond and Art of Letting Go with Sah D'Simone. In addition to this exciting content release, GAIA formed a partnership with YouTube in late 2022, enabling viewers to directly purchase shows through the channel.
While these series will initially air, they will also be available for download several months later, ensuring viewers can enjoy the content at their convenience.
For the first quarter that ended March 31, 2023, GAIA’s net revenue amounted to $19.65 million, while its gross profit stood at $16.87 million. The company’s total operating expenses declined 3.9% from the prior-year quarter to $17.90 million. Also, its adjusted EBITDA came in at $3.22 million for the same period.
Analysts expect GAIA’s revenue for the third quarter (ending September 2023) to increase 8% year-over-year to $21.50 billion. Its EPS is expected to improve by 90.9% year-over-year for the same period.
Its revenue has increased at a CAGR of 12.5% and 20.3% over the past three and five years, respectively. Likewise, its total assets have improved at a CAGR of 9.5% in the same period.
The stock has gained 2.5% year-to-date and marginally intraday to close the last trading session at $2.44.
It’s no surprise that GAIA has an overall rating of B, which equates to Buy in our proprietary rating system. It has a B for Value, Stability, and Sentiment. Out of 39 stocks in the same industry, it is ranked #5.
In addition to the POWR Ratings we’ve stated above, we also have GAIA’s ratings for Growth, Momentum, and Quality. Get all GAIA ratings here.
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SKX shares were trading at $51.88 per share on Monday afternoon, down $0.11 (-0.21%). Year-to-date, SKX has gained 23.67%, versus a 12.67% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Mukherjee
Anushka's ultimate aim is to equip investors with essential knowledge that empowers them to make well-informed investment choices and attain sustained financial prosperity in the long run.
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