Reviewing Skechers U.S.A. (NYSE:SKX) and Adidas (OTCMKTS:ADDYY)

Skechers U.S.A. (NYSE:SKX) and Adidas (OTCMKTS:ADDYY) are both consumer discretionary companies, but which is the better business? We will compare the two companies based on the strength of their dividends, valuation, earnings, analyst recommendations, profitability, institutional ownership and risk.

Volatility and Risk

Skechers U.S.A. has a beta of 1.16, suggesting that its share price is 16% more volatile than the S&P 500. Comparatively, Adidas has a beta of 1.18, suggesting that its share price is 18% more volatile than the S&P 500.

Earnings and Valuation

This table compares Skechers U.S.A. and Adidas”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Skechers U.S.A.	$8.97 billion	1.05	$639.47 million	$4.38	14.36
Adidas	$25.63 billion	1.33	$826.72 million	$3.67	25.97

Adidas has higher revenue and earnings than Skechers U.S.A.. Skechers U.S.A. is trading at a lower price-to-earnings ratio than Adidas, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Skechers U.S.A. and Adidas, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Skechers U.S.A.	0	8	5	0	2.38
Adidas	0	3	3	3	3.00

Skechers U.S.A. presently has a consensus price target of $66.75, suggesting a potential upside of 6.10%. Given Skechers U.S.A.’s higher possible upside, analysts plainly believe Skechers U.S.A. is more favorable than Adidas.

Profitability

This table compares Skechers U.S.A. and Adidas’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Skechers U.S.A.	7.07%	13.73%	7.75%
Adidas	4.93%	20.68%	5.99%

Institutional & Insider Ownership

80.0% of Skechers U.S.A. shares are owned by institutional investors. 24.8% of Skechers U.S.A. shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

Adidas beats Skechers U.S.A. on 8 of the 15 factors compared between the two stocks.

About Skechers U.S.A.

Skechers U.S.A., Inc. designs, develops, markets, and distributes footwear for men, women, and children worldwide. The company operates through Wholesale and Direct-to-Consumer segments. It offers footwear under Skechers Hands Free Slip-ins, Skechers Arch Fit, and Skechers Air-Cooled Memory Foam brands. In addition, the company provides men's and women's slip-resistant and safety-toe casuals, and boots for protective footwear in their work environments. It sells its products through department stores, family shoe stores, specialty running and sporting goods retailers, and big box club stores; franchisee and licensee third-party store operators; company-owned retail stores; digital commerce sites and mobile applications; and concept, factory outlet, and big box stores. The company licenses its Skechers brand. Skechers U.S.A., Inc. was incorporated in 1992 and is headquartered in Manhattan Beach, California.

About Adidas

adidas AG, together with its subsidiaries, designs, develops, produces, and markets athletic and sports lifestyle products in Europe, the Middle East, Africa, North America, Greater China, the Asia-Pacific, and Latin America. It offers footwear, apparel, and accessories and gear, such as bags and balls under the adidas brand; golf footwear and apparel under the adidas Golf brand; and outdoor footwear under the Five Ten brand. It sells its products through its own retail stores; mono-branded franchise stores and shop-in-shops; and wholesale and its e-commerce channels. The company was formerly known as adidas-Salomon AG and changed its name to adidas AG in June 2006. adidas AG was founded in 1920 and is headquartered in Herzogenaurach, Germany.