Monthly Archives: April 2016

Initial Observations on Skechers (SKX)

Derived from Piotroski screen


  • Trading at less than 50% of its 52-week high resulting from missing Q3 earnings
  • International sales comprises of 40% of revenue, near its 50% target
  • Correction (presumably) derives from negative sentiment associated with soft consumer discretionary products (driven by low oil prices) for Apparel, Accessories and Footwear
  • Revenue growth of > 20%
  • $4.5bn market cap, net debt negative
  • Relatively cheap shoes (versus Under Armour, Nike)
  • NTM P/E: Current of 13.5x; Average of 19x; High of 28x
  • EPS expected to double from $1.50 / sh to $3.00 / sh


  • Dividends / repurchases
  • Sensitize EPS

First Look: Mylan


  • Has portfolio of over 1,400 drugs
  • Mylan down 30% YoY
  • Share price declined from ~$70 / sh to ~$40 / sh following rejection of takeover bid by Teva ($82 / sh)
  • Acquired Meda for $7.2bn
  • Multiple compression in late 2015 due to attempts to acquire Perrigo
  • 2018E EPS  of $6.00 / sh, (2016E $5.92 / sh)
  • NTM EPS Average of 12x; Current of 10x; High 18x
  • Ranked #1 for generics sales
  • Mylan is a beneficiary of the patent cliff for branded drug companies
  • 45% of revenue is from international markets


  • High revenue and profitability growth – what does terminal state look like?
  • To what degree is management distrust warranted?
  • What is management’s strategy for shareholder payout?


  • Return on capital over 8 years
  • CFO / Total assets for 8 years

Reference Material

Net Working Capital Screen

Developed a screen *proxy* for Graham style net net value (NWC – total debt) by utilizing NWC only.

  • NWC > Market Capitalization

Observations: most companies laden with net debt (of 8 companies) based on companies ranging from 2bn – 15bn on major US exchanges.

Piotroski Screen

  • Piotroski score of 8 or 9
  • < 75% of 52-week high

Notable Equities:

  • Kate Spade – growth play from break-even PE; however bottomed in February 2015
  • Skechers – missed Q3 results resulting in 50% decline; strong growth at $3.2bn revenue (~$200mm Net Income equivalent to 7% margin; EPS expected to double by 2018); international growth focus