K-Swiss (KSWS) was downgraded to Neutral, Merrill Lynch said. Estimates also cut, as the company continues to ramp investments in its new products.

K Swiss

Tennis gear

CEO’s turnaround plan for this sneaker and apparel company appears promising.

Return on Assets: 19%
Free Cash Flow (millions): $62

13%

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Barron's 4/16/07

"Thanks to outsourced manufacturing in China, and unburdened by a capital-consuming retail arm, K-Swiss will keep throwing off cash, even if earnings are depressed. Cash flow last year hit $106.7 million, or a solid 21% of sales. And the international side of the business, 35% of sales, is shaping up as a real bright spot. It's growing almost as rapidly as the domestic portion is in retreat. K-Swiss, for its part, sounds as if it is getting ready to accelerate a long-term 4-million-share buyback program that absorbed only 5,000 shares last quarter. "The time we would buy," Nichols told analysts in February, "is when we have a higher opinion of our company than the market does." Investors might be wise to return that volley with some buying of their own."

Turnaround story over the next 1-2 years. Patience will be rewarded

Stock Annual Growth Rate: +38%

EPS Growth: +61%

52 week return: -2%

I am not sure where the U.S. business settles.

fasion misstep