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Goleta, California-based Deckers Outdoor Corporation (DECK) is a leading designer, producer, and brand manager of innovative, niche footwear and accessories developed for outdoor sports, and other lifestyle-related activities. With a market cap of $17.5 billion, Deckers' proprietary brands include UGG, HOKA, Teva, Sanuk, and Koolaburra.
Companies worth $10 billion or more are generally described as “large-cap stocks,” Deckers fits the bill perfectly. Given the company’s strong portfolio of well-known brands, its valuation above this mark is unsurprising.
Despite its strengths, Deckers’ stock has tanked 46.8% from its all-time high of $223.98 touched on Jan. 30. Furthermore, DECK stock has plunged nearly 42% over the past three months, underperforming the Dow Jones Industrials Average’s ($DOWI) 89 bps dip during the same time frame.
Deckers’ performance has remained grim over the longer term as well. DECK stock dropped 21.7% over the past six months and 21.4% over the past 52 weeks, lagging behind the Dow’s 14 bps dip over the past six months and 7.3% gains over the past year.
To confirm the downturn, Deckers has traded consistently below its 50-day moving average since late January and below its 200-day moving average since early February.
Despite delivering solid financials, Deckers' stock plummeted 20.5% in the trading session after the release of its Q3 results on Jan. 30. Driven by the continued increase in UGG and HOKA’s sales, the company’s overall topline increased 17.1% year-over-year to $1.8 billion. Meanwhile, the company’s net income also surged 17.1% year-over-year to $445 million and its EPS of $3.00 surpassed the consensus estimates by a notable margin.
However, Deckers’ star brand HOKA observed a notable drop in sales growth, while its net sales for the quarter increased 23.7% year-over-year to $530.9 million, it increased at a much slower pace than the 34.7% reported in Q2 and was down 7% on quarter-on-quarter basis. Meanwhile, the company also observed a notable drop in share buybacks compared to Q2 which likely unsettled investor confidence.
Deckers has also underperformed its peer Skechers U.S.A., Inc.’s (SKX) 6.6% decline over the past six months and a 5.1% dip over the past 52 weeks.
Despite the recent lackluster performance on the stock exchange, analysts remain optimistic about Deckers’ growth prospects. Among the 20 analysts covering the DECK stock, the consensus rating is a “Moderate Buy.” Its mean price target of $221.06 suggests a staggering 85.7% upside potential from current price levels.
On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
