With nearly 50% of the total U.S. population fully vaccinated, the Centers  for Disease Control (CDC) has urged schools to fully resume in-person classes by this fall. The CDC has issued a list of guidelines to minimize the spread of the virus because children below 12 years of age remain ineligible for the vaccine. New York City, which has the country’s most extensive schooling system, recently announced that it would not provide a remote learning option this fall in an effort to reopen schools at full capacity.

Footwear companies are likely to benefit from such reopening mandates, given the rising demand for outdoor footwear from the 18 years of age or below demographic.

Thus, we believe popular footwear companies Adidas AG (ADDYY), Under Armour, Inc. (UAA), and Skechers U.S.A., Inc. (SKX) are likely to witness ballooning sales in the coming quarters, which should help their stocks advance.

Adidas AG (ADDYY)

ADDYY is a German-based company that designs, develops, produces, and markets various athletic and sports lifestyle products worldwide. The company offers footwear, apparel, accessories and gear, and golf products under the Adidas and Reebok brands. It sells its products through  company-owned retail stores, mono-branded franchise stores, wholesale distribution, and its e-commerce channel.

On June 16, 2021, ADDYY launched TechFit Period Proof tights, which feature an absorbent layer designed to prevent leaks when using a tampon or pad. Because  the company focuses more on its women consumers now, this product is likely to generate good sales and expand its market reach in the coming months.

ADDYY’s net sales for its fiscal first quarter ended March 31, 2021, increased 20.2% year-over-year to €5.27 billion ($6.26 billion). The company’s gross profit came in at €2.73 billion ($3.24 billion), up 25.4% from the year-ago period. Its operating profit has been reported at €704 million ($836.67 million), representing a 1362.6% gain from the prior-year period. ADDYY’s net income came in at €558 million ($663.16 million), representing a 1719.7% year-over-year improvement. Its EPS increased 1547.6% year-over-year to €2.60 ($3.09). The company had cash and cash equivalents of €3.92 billion ($4.65 billion) as of March 31, 2021.

Analysts expect the stock’s EPS to increase 256.4% for the current year to $4.56. ADDYY surpassed the Street’s EPS estimates in each of the trailing four quarters. The $25.81 billion consensus revenue estimate for the current quarter represents an 8.2% gain from the prior-year period. Analysts expect the stock’s EPS to grow at a 5.6% rate per annum over the next five years.

The stock has gained 30.3% over the past year and 17.6% over the past three months. It closed Friday’s trading session at $182.05.

It’s no surprise that ADDYY has an overall B rating, which equates to Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

The stock has an A grade for Growth, and a B grade for Momentum, Stability, and Quality. Click here to see the additional ratings for ADDYY’s Value and Sentiment.

ADDYY is ranked #15 of 35 stocks in the A-rated Athletics & Recreation industry.

Under Armour, Inc. (UAA)

UAA develops, markets, and distributes branded performance apparel, footwear, and accessories for men, women, and youth worldwide. 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 house stores and e-commerce websites.

For its fiscal first quarter, ended March 31, 2021, UAA’s net sales came in at $1.26 billion, representing a 35.1% rise from the prior-year period. The company’s gross profit increased 45.9% year-over-year to $628.64 million. Its adjusted income from operations has been reported at $114 million for the quarter, compared to a $121.72 million  loss in the prior-year period. Its adjusted net earnings came in at $74.58 million, compared to a $151.78 million loss in the year-ago period. Its adjusted EPS has been reported at $0.16, compared to a $0.34 loss  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 be $5.34 billion, representing a 19.3% rise from the prior-year period. The stock has surpassed consensus EPS estimates in each of the trailing four quarters. Analysts expect UAA’s EPS to grow at a 20% rate  per annum over the next five years. UAA has rallied 78.6% over the past year and 16.9% over 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 B rating, which equates to Buy in our proprietary rating system.

The stock has a B grade for Growth, Momentum, and Quality. We also have graded UAA for Value, Sentiment, and Stability. Click here to access all UAA ratings.

UAA is ranked #23 in the Athletics & Recreation  industry. 

Skechers U.S.A., Inc. (SKX)

SKX designs and markets branded contemporary casual, active, rugged, and lifestyle footwear for men, women, and children worldwide. 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, Calif.

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, avant-garde designs are likely to generate good profits in the coming months.

For its fiscal second quarter, ended June 30, 2021, SKX’s adjusted sales increased 113.7% year-over-year to $1.59 billion. The company’s adjusted gross profit came in at $815.90 million, up 118.1% from the prior-year period. Its adjusted earnings from operations have been reported at $189.40 million, compared to a $61.97 million loss in the year-ago period. SKX’s adjusted net earnings were $124.70 million, versus a $74.50 million loss in the prior-year period. Its adjusted EPS came in at $0.80, compared to a $0.48 loss in the year-ago period. As of June 30, 2021, the company had $1.09 billion in cash and cash equivalents.

A $0.75  consensus EPS estimate for the current quarter, ending September 30, 2021, represents a 42.2% rise from the prior-year period. It surpassed Street’s EPS estimates in three of the trailing 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 67.2% rate  per annum over the next five years.

The stock has gained 81.8% over the past year and 55.7% over the past six months. It ended Friday’s trading session at $53.68.

UAA’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our proprietary rating system.

The stock has an A grade for Sentiment, and a B grade for Growth and Momentum. Click here to see the additional ratings for SKX (Value, Stability, and Quality).

SKX is ranked #11 in the  Athletics & Recreation industry.

ADDYY shares were trading at $188.60 per share on Monday afternoon, up $6.55 (+3.60%). Year-to-date, ADDYY has gained 3.84%, versus a 18.02% rise in the benchmark S&P 500 index during the same period.

About the Author: Sweta Vijayan

Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More...

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