Ricardo Pillai
3 min read
In This Article:
We came across a bullish thesis on Deckers Outdoor Corporation (DECK) on Substack by Charts&Companies. In this article, we will summarize the bulls’ thesis on DECK. Deckers Outdoor Corporation (DECK)'s share was trading at $121.07 as of May 9th. DECK’s trailing and forward P/E were 19.65 and 18.87 respectively according to Yahoo Finance.
A team of athletes showcasing the company's athletic footwear in an outdoor stadium.
Deckers Outdoor Corp., driven by its flagship UGG and HOKA brands, represents a compelling growth story with robust fundamentals and disciplined management. These two brands make up approximately 92% of the company’s revenue, with a business model centered around premium footwear. Deckers maintains a strong financial foundation with $4 billion in assets against $1 billion in liabilities and 151.8 million shares outstanding. Its valuation metrics are underpinned by consistent growth in key financial metrics over the past five years. Book value per share has grown at a CAGR of 21%, while earnings per share (EPS), sales per share, and free cash flow (FCF) per share have risen at CAGRs of 29.9%, 20.8%, and 32%, respectively. Despite modest 1-year FCF growth (0.5%), the company’s five-year trajectory signals exceptional operational efficiency. Valuation remains attractive with P/E, P/S, and P/B ratios at 20.37, 3.91, and 7.25, respectively. The company’s PBG and PEG ratios also suggest the stock is undervalued relative to its growth, with five-year PEG at 0.64 and PBG at 0.32.
Deckers has managed macroeconomic challenges without compromising its long-term vision. FX headwinds, freight normalization, SG&A inflation, and anticipated promotional activity are acknowledged risks, yet management continues to prioritize brand equity and sustainable growth over short-term gains. Notably, strong demand for UGG has limited Q4 inventory, but this scarcity model supports brand desirability. Even with growing geopolitical and supply chain uncertainty, management's forward guidance reflects a resilient and adaptable business. By balancing premium pricing, disciplined marketing, and a flexible supply chain, Deckers stands well-positioned to withstand macro pressures while continuing its long-term growth trajectory. With a clean balance sheet, strong cash flow generation, and undervalued growth ratios, Deckers offers investors an attractive risk/reward opportunity supported by strategic brand stewardship and robust fundamentals.
Deckers Outdoor Corporation (DECK) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 66 hedge fund portfolios held DECK at the end of the fourth quarter which was 61 in the previous quarter. While we acknowledge the risk and potential of DECK as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than DECK but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
