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K-Swiss, Inc. (NASDAQ:KSWS)

CAPS Rating: No stars

The Company designs, develops and markets an array of athletic footwear for sports use, fitness activities and casual wear under the K Swiss brand. Also designs and manufactures footwear under the Royal Elastics brand.

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All Players

181 Outperform
22 Underperform
 

All-Star Players

42 Outperform
7 Underperform
 

Wall Street

4 Outperform
3 Underperform
 

Top NASDAQ:KSWS Bull/Bear Pitches

The best Bull and Bear pitches based on recency and number of recommendations.

hlacheen (99.18)
Submitted January 24, 2007

They will never be as profitable as a Nike since they don't employ child labor, etc... but they are still a fundamentally strong company with brand recognition. I also love their shoes =)

vrk100 (< 20)
Submitted February 25, 2011

Overview Historically K-Swiss operated a great niche business which was fueled by its “Classic” product, a popular all white shoe, which required very little innovation, promotion and working capital investment. With a change in trends and a consumer… More

NASDAQ:KSWS VS S&P 500 (SPY)

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Recent Community Commentary

Read the most recent pitches from players about KSWS.

Recs

0
Member Avatar TheRadical (< 20) Submitted: 6/10/2011 2:04:33 PM : Outperform Start Price: $9.47 NASDAQ:KSWS Score: -183.36

not a wild company, but its pretty consistent. Once they bring back those sweet commericals and get some sponsors, people will be kissin the swiss.

Recs

1
Member Avatar vrk100 (< 20) Submitted: 2/25/2011 3:40:31 PM : Underperform Start Price: $9.81 NASDAQ:KSWS Score: +177.65

Overview
Historically K-Swiss operated a great niche business which was fueled by its “Classic” product, a popular all white shoe, which required very little innovation, promotion and working capital investment. With a change in trends and a consumer downturn, the old cash cow has fast declined and revenue is expected to decline another 5-10% this year down to ($225M off a peak of $500M). K-Swiss is attempting to replace that business with a brand overhaul and a foray into the highly competitive performance footwear segment, a foray I believe is likely to fail and significantly changes the cash flow dynamics of the business.

Investment Thesis:
-K-Swiss trades at a 1.4x 2010E Revenue multiple and is 4-5 years away from being cash flow positive

-KSWS will continue to show negative cash flow through 2013 even in the rosier high growth scenarios

-CEO and controlling shareholder Steve Nichols is (67 years old) is essentially betting the company on its new performance line and its ability to compete with behemoths like Nike and Adidas as well as well established performance brands like New Balance, Asics etc

-Even if this program is successful, the margins, on-going promotional expenses and working capital investment of these sales is far inferior to that of the historical Classics business
-To achieve expected growth KSWS will need to penetrate additional retailers including mass retailers which will demand lower prices and better terms – a fact I believe the street is underestimating

-Further to this "grasping at straws" strategy - KSWS acquired Form Athletics this past quarter which is tied to earn out payment. Form is focused on MMA gear and is meant to be part of a new KSWS "Orange County" division. While small, I think this move supports the short story here.

Catalysts:
-Continued cash burn (~$30M this year or ~$1/ a share)
-Company took no reserve against its deferred tax assets in Q2 citing history of prior operating earnings and expectations for 2011 and beyond – I believe the company will be forced to record a $15m allowance in Q3 or Q4 given the outlook for the business
-Lack of margin improvement / cash flow generation

View vs. Street:
-Street is assuming improved working capital metrics and margins, along with significant revenue growth, while the 15-25% top-line growth may occur over the next few years, I believe the street does not appreciate the decline in cash flow conversion given the source of the revenue growth
-Street is not focused on working capital but I believe this will be a major use of cash given the expected revenue growth and the number of new product launches
-Street has margins expanding to 45% (8 pts +) which made sense historically but would be in line/superior to the larger performance competitors
-Consensus estimates do not account for the $15m reserve against DTAs

Risks
-Incremental spending on promotions and advertising yield results in significant top-line outperformance
-Potential acquisition although unlikely at these valuations and ownership of the business

Recs

1
Member Avatar bofors (< 20) Submitted: 10/7/2010 3:20:52 PM : Underperform Start Price: $12.63 NASDAQ:KSWS Score: +220.62

This is a brief outline of how and why I selected KSWS to underperform:

(1) KSWS has maintained a ceiling in the $13 to $14 range since April and had a celling about $11 during 2009.

(2) KSWS has traded below $11 every month for almost the last two years expect September 2010, and it is likely shortable at $12.50 now.

(3) KSWS's revenues are down some 13% and future orders are down some 9% year over year for the last quarter.

(4) KSWS's lost some 50% more money year over year for the last quarter.

(5) KSWS's attempts to turn itself around with "K-Swiss Orange County" and the "Kenny Powers" TUBES™ campaign look pathetic and weak. Moreover, with the later, KSWS makes a mockery of itself.

(6) KSWS has already written off 2010 and hoping some results might materialize in 2011 or later.

(7) KSWS has always been a small, weak, trendy brand and it was forced into the mainstream without a solid base.

(8) KSWS's TUBES™ seem to lack any real novelty or appeal to the moronic youth market.

(9) One of three KSWS contract manufacturers ceased operations in April and KSWS has had to get temporary capacity elsewhere.

In short, KSWS is a joke and has no expectation of making money for about year or perhaps longer. Before it has another profitable episode, it is highly likely that KSWS will drop below $10.

Leaderboard

Find the members with the highest scoring picks in KSWS.

Score Leader

GS751

GS751 (26.90) Score: +370.43

The Score Leader is the player with the highest score across all their picks in KSWS.

Top
Pick
Member Name Member
Rating
Start
Date
Call Time
Frame
Start
Price
Stock
Gain
Index
Gain
Score Commentary
GS751 26.90 3/12/2009 Underperform NS $7.31 -35.16% +304.77% +339.93 0 Comment
OOji 28.40 3/13/2009 Underperform 1Y $7.26 -34.71% +300.56% +335.27 0 Comment
jerseytix 32.92 5/8/2009 6/5/2011 Underperform 3Y $9.22 -48.59% +228.23% +276.82 1 Comment
Slbrown99 < 20 7/14/2010 Underperform 5Y $11.45 -58.60% +172.47% +231.07 0 Comment
bofors < 20 10/7/2010 Underperform 1Y $12.63 -62.47% +158.15% +220.62 1 Comment
dfgamer 91.96 11/8/2006 Underperform 3W $34.98 -86.45% +130.34% +216.79 0 Comment
joehannon84 < 20 10/30/2006 Underperform NS $33.97 -86.05% +130.59% +216.64 0 Comment
lowrider61 64.93 1/29/2007 Underperform NS $30.72 -84.57% +123.16% +207.73 0 Comment
gobears24 72.48 1/17/2007 Underperform 3M $29.59 -83.98% +121.75% +205.73 0 Comment
NetscribeConsGds 97.00 2/9/2007 Underperform 1Y $33.23 -85.74% +118.75% +204.48 1 Comment

Wall Street

See what the Wall Street professionals think, according to their public statements and filings.

Player Name Player
Rating
Start
Date
Call Time
Frame
Start
Price
Stock
Gain
S&P
Gain
Score End Date Commentary
TrackBRileyandCo < 20 5/18/2010 Outperform NS $12.68 -62.62% +161.98% -224.60 0 Comment
TrackSterneAgee 23.62 4/7/2010 Outperform NS $11.32 -58.13% +151.64% -209.77 0 Comment
TrackBrandes < 20 12/31/2009 Outperform 1Y $9.94 +25.45% +14.59% +10.86 12/31/2010 @ $12.47 0 Comment
TrackSterneAgee 23.62 5/8/2009 Underperform NS $9.22 +22.78% +29.11% +6.33 4/7/2010 @ $11.32 0 Comment
TrackSterneAgee 23.62 6/3/2008 Outperform NS $17.56 -47.51% -33.65% -13.85 5/8/2009 @ $9.22 0 Comment
TrackSoros 84.69 3/31/2008 Outperform NS $15.66 -69.72% +134.91% -204.63 1 Comment
TrackSterneAgee 23.62 3/25/2008 Underperform NS $17.55 -1.12% +3.01% +4.13 6/2/2008 @ $17.35 0 Comment
TrackSusquehanna 85.93 2/27/2008 Underperform NS $14.41 -67.12% +126.48% +193.60 0 Comment
TrackHAndW 82.23 12/31/2007 Outperform NS $17.86 -73.46% +113.09% -186.55 2 Comments
TrackBofASec 91.74 10/5/2007 Underperform NS $24.34 -80.53% +102.04% +182.57 0 Comment
TrackMatrix < 20 8/6/2007 Underperform NS $21.94 -81.91% -4.26% +77.65 4/17/2012 @ $3.97 0 Comment
TrackBreanMurray < 20 6/26/2007 Outperform NS $27.96 -38.84% -10.59% -28.25 2/22/2008 @ $17.10 0 Comment
TrackJimCramer 86.41 1/12/2007 Underperform 3W $29.52 -83.94% +122.17% +206.11 0 Comment
TrackMatrix < 20 10/30/2006 Outperform NS $34.60 -35.41% +4.89% -40.30 8/6/2007 @ $22.35 0 Comment
TrackJGreenblatt 43.62 4/13/2006 Outperform 1Y $29.39 +6.63% +10.05% -3.41 1/1/2007 @ $31.34 0 Comment