RL Gains 2.8% Post Q2 Earnings: Should You Buy or Avoid the Stock?

Shares of Norwegian Cruise Line Holdings Ltd. NCLH have rallied 75.7% in the past six months, outperforming the Zacks Leisure and Recreation Services industry’s growth of 14%.

The company’s impressive third-quarter 2024 results anchored by resilient demand, elevated onboard offerings and targeted growth strategies have positioned it ahead of competitors. In the same time frame, stocks like Carnival Corporation & plc CCL, Royal Caribbean Cruises Ltd. RCL and OneSpaWorld Holdings Limited OSW have gained 69%, 66.8% and 30.9%, respectively.

NCLH Price Performance

Shares of Deckers Outdoor Corporation DECK have experienced a surge over the past year. The stock has rallied 69%, comfortably outpacing the Zacks Retail-Apparel and Shoes industry’s modest 25.3% growth. The company’s impressive growth can be attributed to its strategic emphasis on expanding brand presence and strengthening direct-to-consumer (DTC) channels.

The company’s commitment to innovation in product development and a strong focus on international market expansion have enabled it to outperform both the broader Retail-Wholesale sector and the S&P 500 index, which grew 35.8% and 36%, respectively, during the same period. Closing at $177.08 on yesterday, DECK stock is moving toward its 52-week high of $184.48 attained on June 3, 2024.

Deckers has shown solid upward momentum, currently trading above both its 200-day and 50-day simple moving averages (SMA), which are key indicators of price stability and long-term bullish trends. In yesterday’s trading session, DECK surpassed its 200-day SMA of $153.16 and 50-day SMA of $158.57. This technical strength, coupled with continued momentum, signals positive market sentiment and growing investor confidence in DECK's financial health and growth potential.

Wolverine World Wide, Inc.’s WWW shares reached a new 52-week high of $22.60 yesterday before closing at $22.31. So far, WWW stock has rallied 151% against the Zacks Shoes and Retail Apparel industry’s sharp 16.6% decline.

The company’s ongoing strategic approach and product diversification have enabled it to outperform the broader Zacks Consumer Discretionary sector and the S&P 500 index’s growth of 10% and 26.1%, respectively, during the same period.

Moreover, the company has shown solid upward momentum, currently trading above both its 200-day and 50-day simple moving averages (SMA), key indicators of price stability and long-term bullish trends. In yesterday’s trading session, WWW surpassed its 200-day SMA of $12.70 and 50-day SMA of $16.12. This technical strength, coupled with continued momentum, signals positive market sentiment and growing investor confidence in WWW's financial health and growth potential.

Live Nation Entertainment, Inc.'s LYV third-quarter 2024 earnings surpassed the Zacks Consensus Estimate but revenues missed the same. The top and bottom lines declined from the prior-year quarter’s level.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

Following the results, the company shares gained 7.6% during the after-hours trading session yesterday. Positive investor sentiments were witnessed as the company shared its outlook on expanding growth opportunities, driven by an unprecedented summer concert season and a record-breaking show pipeline.

Despite the one-time accrual impacts on operating income, Live Nation anticipates achieving double-digit AOI (Adjusted Operating Income) growth in 2024. Also, it stated optimism for continued momentum into 2025, with a more extensive lineup of stadium, arena and amphitheater shows to meet high fan demand.

LYV’s Q3 Earnings & Revenues

During the third quarter, the company reported adjusted earnings per share (EPS) of $1.66, surpassing the Zacks Consensus Estimate of $1.58 by 5.1%. In the year-ago quarter, the company reported an adjusted EPS of $1.93.

Live Nation Entertainment, Inc. Price, Consensus and EPS Surprise

Live Nation Entertainment, Inc. price-consensus-eps-surprise-chart | Live Nation Entertainment, Inc. Quote

Revenues amounted to $7.7 billion, missing the consensus mark of $7.8 billion. The top line declined 6.2% year over year from $8.2 billion.

Segmental Discussion

Concerts: The segment’s revenues totaled $6.6 billion, down 6% year over year. Our model predicted the metric to fall 0.4% year over year. AOI was $474.1 million, up 39% from the year-ago figure.

Ticketing: Segmental revenues amounted to $693.7 million, down 17% from the prior-year quarter level. Our model estimated the metric to decline 0.9% year over year. AOI was $235.7 million, down 33% year over year.

Sponsorship & Advertising: Revenues from this segment totaled $390.3 million, up 6% from the year-ago quarter’s figure. We estimated the metric to decline 0.4% year over year. AOI was $275.3 million, up 10% year over year.

Other Financial Information

Live Nation's cash and cash equivalents as of Sept. 30, 2024, totaled $5.5 billion, up from $6.23 billion as of Dec. 31, 2023. At the end of the third quarter, goodwill was $2.67 billion compared with $2.69 billion at the end of 2023. Net long-term debt came in at $5.67 billion compared with $5.46 billion as of Dec. 31, 2023.

At the end of the first nine months of 2024, net cash provided by operating activities was $680.1 million compared with $754.6 million reported in the year-ago period.

LYV’s Zacks Rank

Live Nation currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

Recent Consumer Discretionary Releases

Royal Caribbean Cruises Ltd. RCL posted impressive third-quarter 2024 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and bottom lines increased on a year-over-year basis.

In the quarter, the company exceeded its guidance, driven by stronger pricing on close-in demand, continued growth in onboard revenues and reduced costs due to timing factors. The company has raised its outlook for 2024 and reported elevated demand patterns heading into 2025.

Mattel, Inc. MAT reported impressive third-quarter 2024 results, wherein the adjusted earnings and net sales topped the Zacks Consensus Estimate. The top line surpassed the consensus estimate after missing it for three consecutive quarters. On a year-over-year basis, net sales declined while adjusted earnings grew.

The company’s quarterly results benefited from its Optimizing for Profitable Growth program along with the focus on its multi-year strategy to expand its IP-driven toy business and entertainment offering. Although the top line was adversely impacted by reduced sales from both the reportable segments, the bottom line showed resilience through operational efficiencies.

Hilton Worldwide Holdings Inc. HLT reported third-quarter 2024 results, with earnings and revenues beating the Zacks Consensus Estimate. Both the metrics increased on a year-over-year basis.

The company's performance was backed by notable improvements in RevPAR, attributed to higher occupancy rates and average daily rates. Furthermore, in the quarter, Hilton opened 531 new hotels. It achieved net room growth of 33,600. As of Sept. 30, 2024, Hilton's development pipeline comprised nearly 3,525 hotels, with almost 492,400 rooms across 120 countries and territories — including 28 countries and regions with no running hotels. For 2024, the company expects net unit growth in the range of 7-7.5%.

Zacks Investment Research

Skechers U.S.A., Inc. SKX shares have surged 26% over the past year, significantly outperforming the Zacks Shoes and Retail Apparel industry’s decline of 11.6%. The company responds to shifting consumer preferences by investing in omnichannel capabilities and infrastructure, and expanding its global market reach, leading to substantial growth in both its wholesale and direct-to-consumer (DTC) segments.

This approach, along with SKX’s commitment to innovation in product development and a keen focus on international market expansion, has helped it outperform the broader Consumer Discretionary sector’s growth of 19.5% in the past year. Closing at $62.29 on Friday, Sketchers’ stock is currently trading 17% below its 52-week high of $75.09 attained on June 12, 2024.

From a valuation perspective, Skechers’ shares present an attractive opportunity, trading at a discount relative to historical and industry benchmarks. With a forward 12-month price-to-earnings ratio of 13.09, below the five-year median of 15.37 and the industry’s average of 25.31, the stock offers compelling value for investors seeking exposure to the sector. Additionally, SKX’s current Value Score of A reinforces its attractiveness.

Skechers’ Multi-Brand Strategy Drives Growth

Skechers continues to strengthen its portfolio with a diverse range of fashion, athletic, non-athletic and work footwear, all offered at competitive prices. The company’s multi-brand strategy allows it to introduce new products without affecting its existing brands while expanding its reach to a broader consumer base.

The company is also investing in its global infrastructure, focusing on retail stores, e-commerce platforms and distribution centers. These efforts are aimed at enhancing omnichannel capabilities and growing the DTC business. Skechers has emphasized creating a seamless shopping experience for customers, integrating physical stores with digital platforms and improving loyalty programs.

Skechers’ wholesale segment has shown strong growth, driven by strategic investments in logistics and retailer relationships. In the third quarter of 2024, wholesale sales rose 20.6%, reaching $1.42 billion. This was driven by a 26% increase in domestic sales and an 18% rise internationally. Notable growth was seen in the EMEA region, with a 30.9% year-over-year increase.

The DTC segment also performed well in the third quarter, with sales rising 9.6% to $931.7 million. International DTC sales increased 14.4%, with significant growth of 28% in the EMEA region and a 3.7% rise in domestic sales.

Skechers' strong consumer appeal, particularly for its comfort technology, is reflected in its robust performance across both brick-and-mortar stores and online channels. The company's international business has also been a key driver of growth, with international sales up 16.4% year over year, accounting for 61% of its total sales, underlining the significance of its global footprint.

SKX Raises 2024 Outlook, Targets $10B Sales by 2026

Skechers raised its fiscal 2024 outlook, projecting sales between $8.93 billion and $8.98 billion compared with the previously estimated $8.88-$8.98 billion. This represents growth from $8 billion reported in fiscal 2023. The company has also increased its earnings per share (EPS) forecast to $4.20 and $4.25 from the previously stated $4.08-$4.18, suggesting solid growth from the $3.49 EPS in the prior year.

Skechers is set to invest $375-$400 million in capital expenditure to support key strategic initiatives, such as store openings, omnichannel expansion and improving its distribution infrastructure. These investments align with its goal of reaching $10 billion in annual sales by 2026.

Estimate Revision Favoring Skechers Stock

Analysts have responded positively to Skecher’s prospects, reflected in upward revisions in the Zacks Consensus Estimate for EPS. In the past 30 days, analysts have increased their estimates for the current financial year by 7 cents. The consensus estimate for earnings is pegged at $4.21 per share.

The consensus estimate for the next financial year has also been raised 4 cents to $4.85 per share. The Zacks Consensus Estimate for the current and next year’s sales is pegged at $8.97 billion and $9.82 billion, indicating year-over-year growth of 12.2% and 9.4%, respectively.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Conclusion

Investors can consider betting on Skechers stock due to its strategic alignment with evolving consumer demands and robust growth across multiple channels. The company’s omnichannel and international expansion, coupled with its diverse product line-up, has driven substantial growth in both wholesale and direct-to-consumer segments.

Skechers’ multi-brand strategy, which includes a strong focus on comfort technology, broadens its consumer appeal while minimizing overlap between brands, helping it capture a wide market share. Valuation-wise, SKX offers an attractive entry point, with shares trading at a discount compared to the industry. Upward revisions in earnings estimates further reinforce its growth potential, making it an appealing choice for investors seeking stability and expansion within the footwear industry. The company currently has a Zacks Rank #2 (Buy).

Other Key Picks

Some other top-ranked stocks are Gildan Activewear Inc. GIL, Abercrombie & Fitch Co. ANF and Steven Madden, Ltd. SHOO.

Gildan is a manufacturer and marketer of premium quality branded basic activewear for sale principally in the wholesale imprinted activewear segment of the North American apparel market. It currently sports a Zacks Rank #2. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

The Zacks Consensus Estimate for Gildan’s current financial year earnings and sales indicates growth of 15.6% and 1.5%, respectively, from the 2023’s reported figures. GIL has a trailing four-quarter average earnings surprise of 5.4%.

Abercrombie is a specialty retailer of premium, high-quality casual apparel. It has a Zacks Rank #2 at present. ANF delivered a 16.8% earnings surprise in the last reported quarter.

The consensus estimate for Abercrombie’s fiscal 2025 earnings and sales indicates growth of 63.4% and 13%, respectively, from the fiscal 2024 reported levels. ANF has a trailing four-quarter average earnings surprise of 28%.

Steven Madden designs, sources, markets and sells fashion-forward name-brand and private-label footwear. It currently has a Zacks Rank of 2.

The Zacks Consensus Estimate for Steven Madden’s 2024 earnings and sales indicates growth of 8.2% and 12.7%, respectively, from the year-ago actuals. SHOO has a trailing four-quarter average earnings surprise of 9.8%.

Zacks Investment Research

Launched on 08/13/2013, the Schwab Fundamental U.S. Small Company ETF (FNDA) is a smart beta exchange traded fund offering broad exposure to the Style Box - Small Cap Value category of the market.

What Are Smart Beta ETFs?

For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.

Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.

There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.

Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.

Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.

Fund Sponsor & Index

Managed by Charles Schwab, FNDA has amassed assets over $9.72 billion, making it one of the largest ETFs in the Style Box - Small Cap Value. This particular fund seeks to match the performance of the Russell RAFI US Small Co. Index before fees and expenses.

The RAFI Fundamental High Liquidity US Small Index measures the performance of small U.S. companies based on their fundamental size and weight.

Cost & Other Expenses

When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.

With one of the cheaper products in the space, this ETF has annual operating expenses of 0.25%.

FNDA's 12-month trailing dividend yield is 1.32%.

Sector Exposure and Top Holdings

ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Industrials sector - about 20.50% of the portfolio. Financials and Consumer Discretionary round out the top three.

When you look at individual holdings, Echostar Corp Class A (SATS) accounts for about 0.44% of the fund's total assets, followed by Royal Caribbean Group Ltd (RCL) and Abercrombie And Fitch Class A (ANF).

The top 10 holdings account for about 2.59% of total assets under management.

Performance and Risk

The ETF has added roughly 15.16% and was up about 35.15% so far this year and in the past one year (as of 11/11/2024), respectively. FNDA has traded between $23.57 and $31.58 during this last 52-week period.

The ETF has a beta of 1.18 and standard deviation of 21.42% for the trailing three-year period, making it a medium risk choice in the space. With about 1041 holdings, it effectively diversifies company-specific risk.

Alternatives

Schwab Fundamental U.S. Small Company ETF is an excellent option for investors seeking to outperform the Style Box - Small Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.

Avantis U.S. Small Cap Value ETF (AVUV) tracks ---------------------------------------- and the Vanguard Small-Cap Value ETF (VBR) tracks CRSP U.S. Small Cap Value Index. Avantis U.S. Small Cap Value ETF has $15.13 billion in assets, Vanguard Small-Cap Value ETF has $32.46 billion. AVUV has an expense ratio of 0.25% and VBR charges 0.07%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Small Cap Value.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

Zacks Investment Research