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Deckers (DECK) Up 12% in 3 Months: What's Next for Investors?
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Deckers Outdoor Corporation (DECK - Free Report) has experienced a remarkable jump in its stock price over the past three months. The stock has rallied 12.2%, comfortably outpacing the Zacks Retail-Apparel and Shoes industry’s modest rise of 7.7%. The company's commitment to customizing its product development, marketing efforts and omni-channel distribution to align with consumer preferences has also helped it outperform the broader Retail-Wholesale sector and the S&P 500 index’s respective growth of 8.1% and 11.9% in the same period.
This impressive uptick has left many investors wondering if they missed out on a lucrative opportunity or if there is still potential for growth. Closing at $912.87 as of Jul 16, the DECK stock is inching toward its 52-week high of $1106.89 attained on Jun 3, 2024.
Technical indicators are supportive of Deckers’ strong performance. The stock is trading above both its 100-day and 200-day moving averages, indicating robust upward momentum and price stability. This technical strength reflects positive market perception and confidence in Deckers’ financial health and prospects. The stock currently has a Value Score of B, further validating its appeal.
Image Source: Zacks Investment Research
Decoding the Tailwinds
Deckers is poised for sustained growth through strategic initiatives, robust Direct-to-Consumer (DTC) and wholesale channels, and a clear focus on expanding its key brands, UGG and HOKA. In the fourth quarter of 2024, DTC net sales rose 21% year over year to $415.2 million, with DTC comparable net sales increasing by 20.5%, highlighting Deckers' success in engaging directly with consumers. We foresee 17.9% growth in DTC revenues in fiscal 2025.
Deckers' focus on product innovation is evident in launches of the latest styles and collections, reflecting a deep understanding of consumer preferences and market trends. The company's efforts to engage consumers through brand activations, collaborations and social media initiatives highlight its commitment to building meaningful connections and driving brand loyalty.
The wholesale channel, a crucial revenue component, demonstrated commendable performance, with fourth-quarter revenues increasing 21.4% year over year to $544.6 million, particularly in the United States and Europe. This strength underscores Deckers' brand portfolio and its ability to forge enduring partnerships with retailers, expanding market reach and enhancing brand visibility globally.
Shareholder-Friendly Moves Bode Well
Deckers showcases strong liquidity, backed by a solid cash position. As of Mar 31, 2024, the company held $1.50 billion in cash and cash equivalents, enhancing its financial flexibility. Importantly, Deckers had no outstanding borrowings during this period, reflecting a healthy balance sheet. The net cash flow provided by operating activities was $1.03 billion as of Mar 31, 2024.
Additionally, in the fourth quarter, DECK demonstrated confidence in its financial strength by repurchasing approximately 119,000 shares, amounting to $104.3 million. This highlights management's commitment to enhancing shareholder value and signifies confidence in the company's prospects. As of Mar 31, 2024, DECK had $941.7 million remaining under its share repurchase authorization.
Growth Prospects Ahead
Deckers expects a 10% increase in fiscal 2025 net sales, reaching $4.7 billion. HOKA is projected to grow 20%, driven by consumer gains in the DTC channel, strategic partner expansion and international market growth. UGG is expected to increase in the mid-single digits, driven by international expansion and maintaining a healthy U.S. market.
Fiscal 2025 earnings are forecast to be $29.50-$30.00 per share, whereas it reported $29.16 last year. Capital expenditure is expected to be $115-$125 million, focusing on supply chain, warehouse capabilities, IT projects and retail updates. For the first quarter of fiscal 2025, Deckers expects revenue growth in the high teens and the gross margin slightly above the full fiscal 2024 guided rate.
Estimate Revision Favoring the Stock
The Zacks Consensus Estimate for earnings per share has seen upward revisions, reflecting positive sentiments around Deckers. Over the past 30 days, analysts have increased their estimates for the current and next fiscal years by 3.4% to $30.59 and 4.7% to $34.37 per share, respectively, indicating year-over-year growth rates of 4.9% and 12.3%.
Wrapping Up
Investors should consider investing in Deckers due to its strong financial health and liquidity, with no outstanding borrowings and a solid cash position. The company's success in both DTC and wholesale channels highlights its robust operational performance and market reach. Additionally, the positive market sentiment and upward earnings revisions reflect confidence in Deckers' continued success and potential for gains. Rightly, Deckers currently has a Zacks Rank #2 (Buy).
Three Other Solid Picks
Some other top-ranked stocks in the retail space are The Gap, Inc. (GPS - Free Report) , Abercrombie & Fitch Co. (ANF - Free Report) and Urban Outfitters Inc. (URBN - Free Report) .
Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Gap’s fiscal 2024 earnings and sales indicates growth of 21.7% and 0.2%, respectively, from the fiscal 2023 reported figures. GPS has a trailing four-quarter average earnings surprise of 202.7%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It flaunts a Zacks Rank of 1 at present. ANF delivered a 28.9% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s fiscal 2024 earnings and sales indicates growth of 47.3% and 10.4%, respectively, from the fiscal 2023 reported levels. ANF has a trailing four-quarter average earnings surprise of 210.3%.
Urban Outfitters is a lifestyle specialty retailer that offers fashion apparel and accessories, footwear, home décor and gift products. It currently has a Zacks Rank of 2.
The Zacks Consensus Estimate for Urban Outfitters’ fiscal 2024 earnings and sales indicates growth of 9.9% and 5.8%, respectively, from the year-ago actuals. URBN has a trailing four-quarter average earnings surprise of 16.9%.
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Deckers (DECK) Up 12% in 3 Months: What's Next for Investors?
Deckers Outdoor Corporation (DECK - Free Report) has experienced a remarkable jump in its stock price over the past three months. The stock has rallied 12.2%, comfortably outpacing the Zacks Retail-Apparel and Shoes industry’s modest rise of 7.7%. The company's commitment to customizing its product development, marketing efforts and omni-channel distribution to align with consumer preferences has also helped it outperform the broader Retail-Wholesale sector and the S&P 500 index’s respective growth of 8.1% and 11.9% in the same period.
This impressive uptick has left many investors wondering if they missed out on a lucrative opportunity or if there is still potential for growth. Closing at $912.87 as of Jul 16, the DECK stock is inching toward its 52-week high of $1106.89 attained on Jun 3, 2024.
Technical indicators are supportive of Deckers’ strong performance. The stock is trading above both its 100-day and 200-day moving averages, indicating robust upward momentum and price stability. This technical strength reflects positive market perception and confidence in Deckers’ financial health and prospects. The stock currently has a Value Score of B, further validating its appeal.
Image Source: Zacks Investment Research
Decoding the Tailwinds
Deckers is poised for sustained growth through strategic initiatives, robust Direct-to-Consumer (DTC) and wholesale channels, and a clear focus on expanding its key brands, UGG and HOKA. In the fourth quarter of 2024, DTC net sales rose 21% year over year to $415.2 million, with DTC comparable net sales increasing by 20.5%, highlighting Deckers' success in engaging directly with consumers. We foresee 17.9% growth in DTC revenues in fiscal 2025.
Deckers' focus on product innovation is evident in launches of the latest styles and collections, reflecting a deep understanding of consumer preferences and market trends. The company's efforts to engage consumers through brand activations, collaborations and social media initiatives highlight its commitment to building meaningful connections and driving brand loyalty.
The wholesale channel, a crucial revenue component, demonstrated commendable performance, with fourth-quarter revenues increasing 21.4% year over year to $544.6 million, particularly in the United States and Europe. This strength underscores Deckers' brand portfolio and its ability to forge enduring partnerships with retailers, expanding market reach and enhancing brand visibility globally.
Shareholder-Friendly Moves Bode Well
Deckers showcases strong liquidity, backed by a solid cash position. As of Mar 31, 2024, the company held $1.50 billion in cash and cash equivalents, enhancing its financial flexibility. Importantly, Deckers had no outstanding borrowings during this period, reflecting a healthy balance sheet. The net cash flow provided by operating activities was $1.03 billion as of Mar 31, 2024.
Additionally, in the fourth quarter, DECK demonstrated confidence in its financial strength by repurchasing approximately 119,000 shares, amounting to $104.3 million. This highlights management's commitment to enhancing shareholder value and signifies confidence in the company's prospects. As of Mar 31, 2024, DECK had $941.7 million remaining under its share repurchase authorization.
Growth Prospects Ahead
Deckers expects a 10% increase in fiscal 2025 net sales, reaching $4.7 billion. HOKA is projected to grow 20%, driven by consumer gains in the DTC channel, strategic partner expansion and international market growth. UGG is expected to increase in the mid-single digits, driven by international expansion and maintaining a healthy U.S. market.
Fiscal 2025 earnings are forecast to be $29.50-$30.00 per share, whereas it reported $29.16 last year. Capital expenditure is expected to be $115-$125 million, focusing on supply chain, warehouse capabilities, IT projects and retail updates. For the first quarter of fiscal 2025, Deckers expects revenue growth in the high teens and the gross margin slightly above the full fiscal 2024 guided rate.
Estimate Revision Favoring the Stock
The Zacks Consensus Estimate for earnings per share has seen upward revisions, reflecting positive sentiments around Deckers. Over the past 30 days, analysts have increased their estimates for the current and next fiscal years by 3.4% to $30.59 and 4.7% to $34.37 per share, respectively, indicating year-over-year growth rates of 4.9% and 12.3%.
Wrapping Up
Investors should consider investing in Deckers due to its strong financial health and liquidity, with no outstanding borrowings and a solid cash position. The company's success in both DTC and wholesale channels highlights its robust operational performance and market reach. Additionally, the positive market sentiment and upward earnings revisions reflect confidence in Deckers' continued success and potential for gains. Rightly, Deckers currently has a Zacks Rank #2 (Buy).
Three Other Solid Picks
Some other top-ranked stocks in the retail space are The Gap, Inc. (GPS - Free Report) , Abercrombie & Fitch Co. (ANF - Free Report) and Urban Outfitters Inc. (URBN - Free Report) .
Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Gap’s fiscal 2024 earnings and sales indicates growth of 21.7% and 0.2%, respectively, from the fiscal 2023 reported figures. GPS has a trailing four-quarter average earnings surprise of 202.7%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It flaunts a Zacks Rank of 1 at present. ANF delivered a 28.9% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s fiscal 2024 earnings and sales indicates growth of 47.3% and 10.4%, respectively, from the fiscal 2023 reported levels. ANF has a trailing four-quarter average earnings surprise of 210.3%.
Urban Outfitters is a lifestyle specialty retailer that offers fashion apparel and accessories, footwear, home décor and gift products. It currently has a Zacks Rank of 2.
The Zacks Consensus Estimate for Urban Outfitters’ fiscal 2024 earnings and sales indicates growth of 9.9% and 5.8%, respectively, from the year-ago actuals. URBN has a trailing four-quarter average earnings surprise of 16.9%.