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Skechers USA WACC %

:8.9% (As of Today)
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As of today (2021-10-24), Skechers USA's weighted average cost of capital is 8.9%. Skechers USA's ROIC % is 12.57% (calculated using TTM income statement data). Skechers USA generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.


Skechers USA WACC % Historical Data

The historical data trend for Skechers USA's WACC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Skechers USA Annual Data
Trend Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20
WACC %
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 3.74 0.71 6.52 10.33 7.36

Skechers USA Quarterly Data
Sep16 Dec16 Mar17 Jun17 Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21
WACC % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 9.13 7.87 7.36 8.39 8.44

Competitive Comparison

For the Footwear & Accessories subindustry, Skechers USA's WACC %, along with its competitors' market caps and WACC % data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

   

Skechers USA WACC % Distribution

For the Manufacturing - Apparel & Accessories industry and Consumer Cyclical sector, Skechers USA's WACC % distribution charts can be found below:

* The bar in red indicates where Skechers USA's WACC % falls into.



Skechers USA WACC % Calculation

The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. The WACC is commonly referred to as the firm's cost of capital. Generally speaking, a company's assets are financed by debt and equity. WACC is the average of the costs of these sources of financing, each of which is weighted by its respective use in the given situation. By taking a weighted average, we can see how much interest the company has to pay for every dollar it finances.

WACC=E/(E + D)*Cost of Equity+D/(E + D)*Cost of Debt*(1 - Tax Rate)

1. Weights:
Generally speaking, a company's assets are financed by debt and equity. We need to calculate the weight of equity and the weight of debt.
The market value of equity (E) is also called "Market Cap". As of today, Skechers USA's market capitalization (E) is $7133.997 Mil.
The market value of debt is typically difficult to calculate, therefore, GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding the latest two-year average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together. As of Jun. 2021, Skechers USA's latest two-year average Short-Term Debt & Capital Lease Obligation was $261.5345 Mil and its latest two-year average Long-Term Debt & Capital Lease Obligation was $1379.839 Mil. The total Book Value of Debt (D) is $1641.3735 Mil.
a) weight of equity = E / (E + D) = 7133.997 / (7133.997 + 1641.3735) = 0.813
b) weight of debt = D / (E + D) = 1641.3735 / (7133.997 + 1641.3735) = 0.187

2. Cost of Equity:
GuruFocus uses Capital Asset Pricing Model (CAPM) to calculate the required rate of return. The formula is:
Cost of Equity = Risk-Free Rate of Return + Beta of Asset * (Expected Return of the Market - Risk-Free Rate of Return)
a) GuruFocus uses 10-Year Treasury Constant Maturity Rate as the risk-free rate. It is updated daily. The current risk-free rate is 1.68000000%. Please go to Economic Indicators page for more information. Please note that we use the 10-Year Treasury Constant Maturity Rate of the country/region where the company is headquartered. If the data for that country/region is not available, then we will use the 10-Year Treasury Constant Maturity Rate of the United States as default.
b) Beta is the sensitivity of the expected excess asset returns to the expected excess market returns. Skechers USA's beta is 1.51.
c) (Expected Return of the Market - Risk-Free Rate of Return) is also called market premium. GuruFocus requires market premium to be 6%.
Cost of Equity = 1.68000000% + 1.51 * 6% = 10.74%

3. Cost of Debt:
GuruFocus uses last fiscal year end Interest Expense divided by the latest two-year average debt to get the simplified cost of debt.
As of Dec. 2020, Skechers USA's interest expense (positive number) was $16.327 Mil. Its total Book Value of Debt (D) is $1641.3735 Mil.
Cost of Debt = 16.327 / 1641.3735 = 0.9947%.

4. Multiply by one minus Average Tax Rate:
GuruFocus uses the latest two-year average tax rate to do the calculation. The calculated average tax rate is limited to between 0% and 100%. If the calculated average tax rate is higher than 100%, it is set to 100%. If the calculated average tax rate is less than 0%, it is set to 0%.
The latest Two-year Average Tax Rate is 11.345%.

Skechers USA's Weighted Average Cost Of Capital (WACC) for Today is calculated as:

WACC=E / (E + D)*Cost of Equity+D / (E + D)*Cost of Debt*(1 - Tax Rate)
=0.813*10.74%+0.187*0.9947%*(1 - 11.345%)
=8.9%

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Skechers USA  (NYSE:SKX) WACC % Explanation

Because it costs money to raise capital. A firm that generates higher ROIC % than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, Skechers USA's weighted average cost of capital is 8.9%. Skechers USA's ROIC % is 12.57% (calculated using TTM income statement data). Skechers USA generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.


Be Aware

1. GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding latest two-year average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together.

2. The WACC formula discussed above does not include Preferred Stock. Please adjust if preferred stock is considered.

3. (Expected Return of the Market - Risk-Free Rate of Return) is also called market premium. GuruFocus requires market premium to be 6%.

4. GuruFocus uses last fiscal year end Interest Expense divided by the latest two-year average debt to get the simplified cost of debt.


Related Terms

Skechers USA Business Description

Skechers USA logo
Traded in Other Exchanges
Address
228 Manhattan Beach Boulevard, Manhattan Beach, CA, USA, 90266
Skechers USA Inc is a lifestyle footwear company under the Skechers GO brand name. Products offered include various styles of women's shoes, men's shoes, girl's shoes, boy's shoes, performance shoes, and work shoes. Allied products offered are apparel, bags, eyewear, toys, and more. Its products are available for sale at department and specialty stores, athletic and independent retailers, boutiques, and internet retailers. The company's operating segments include Domestic Wholesale, International Wholesale, and Direct-to-Consumer. It generates maximum revenue from the International Wholesale segment.
Executives
Greenberg Michael director, officer: President SKECHERS USA INC 228 MANHATTAN BEACH BLVD MANHATTAN BEACH CA 90266
Greenberg Robert director, 10 percent owner, officer: Chief Executive Officer SKECHERS USA INC 228 MANHATTAN BEACH BLVD MANHATTAN BEACH CA 90266
Weinberg David director, officer: Chief Operating Officer PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> Ownership Information: WEINBERG DAVID a.header:link {color: #3b4fae; font-weight: bold; text-decoration: underline;} a.header:visited {color: #3b4fae; font-weight: bold; text-decoration: underline;} a.header:hover {color: #191970;}
Greenberg Family Trust 10 percent owner 228 MANHATTAN BEACH BLVD MANHATTAN BEACH CA 90266
Greenberg M Susan 10 percent owner 228 MANHATTAN BEACH BLVD MANHATTAN BEACH CA 90266
Blair Katherine J. director 228 MANHATTAN BEACH BOULEVARD MANHATTAN BEACH CA 90266
Erlich Morton D director 228 MANHATTAN BEACH BLVD. MANHATTAN BEACH CA 90266
Siskind Richard director C/O R SISKIND & CO 1385 BROADWAY NEW YORK NY 10018
Kosinski Geyer director PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> Ownership Information: KOSINSKI GEYER a.header:link {color: #3b4fae; font-weight: bold; text-decoration: underline;} a.header:visited {color: #3b4fae; font-weight: bold; text-decoration: underline;} a.header:hover {color: #191970;}
Rappaport Richard director 1900 AVENUE OF THE STARS SUITE 301 LOS ANGELES CA 90067
Walsh Thomas director 12548 W. FETLOCK TRAIL PEORIA AZ 85383
Paccione Phillip officer: General Counsel & Secretary PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> Ownership Information: PACCIONE PHILLIP a.header:link {color: #3b4fae; font-weight: bold; text-decoration: underline;} a.header:visited {color: #3b4fae; font-weight: bold; text-decoration: underline;} a.header:hover {color: #191970;}
Nason Mark A officer: Executive Vice President PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> Ownership Information: NASON MARK A a.header:link {color: #3b4fae; font-weight: bold; text-decoration: underline;} a.header:visited {color: #3b4fae; font-weight: bold; text-decoration: underline;} a.header:hover {color: #191970;}
Greenberg Jeffrey director PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> Ownership Information: GREENBERG JEFFREY a.header:link {color: #3b4fae; font-weight: bold; text-decoration: underline;} a.header:visited {color: #3b4fae; font-weight: bold; text-decoration: underline;} a.header:hover {color: #191970;}
Vandemore John M officer: Chief Financial Officer 6355 S. BUFFALO DRIVE LAS VEGAS NV 89521

Skechers USA Headlines

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