< Return to Bulls page

DECK consistently outperforms analysts expectations

California-based footwear play Deckers Outdoor (DECK) reported stellar earnings results: Q1 EPS of 86c (20% growth) vs. cons of 76c (DECK, on average, beats by 12c) and revenue of $97.5M (34% increase). The company’s main line – the sheepskin Ugg boot, which accounted for 56% of the Q’s sales – posted sales of $54M, an 86% increase YoY. DECK also increased Q2 guidance for 30% growth on the bottom line and 50% on the top line. Lastly, DECK said 2008 revenues should grow to the tune of 30%, an increase from the 25% rise they expected just a quarter ago.

Part of Friday’s surge can be attributed to the large short interest hounding DECK (6 days to cover/26% of float). This should help lift the stock up some more in the near term as not all the bearish bets out there have likely been unwinded. We continue to view DECK as sustainable high end luxury comfort footwear play with a tight lid on inventory control and keen awareness about what its core customer wants. The Ugg line could be a $500M brand by 2012 and international growth should contribute nicely to the firm’s target $750M 2012 total revenue target.

The Street was expecting DECK to turn into another CROX or HLYS, and it didn’t happen. The macro environment isn’t harming their business to the degree many were projecting and DECK remains, along with NKE, our best idea in the footwear space. DECK is valued somewhere around the $157 handle (based on above-cons 2009 EPS of $7.50 and 21x multiple). As the chart below indicates, DECK’s valuation has come in a bit even though the fundamental story has remained attractive.

In the last four quarters, DECK’s P/E has ranged from as low as 17x to as high as 32x; currently, the stock is fetching 21.7x 09 consensus numbers. A higher multiple could be justified if DECK continues to outshine rivals in the debilitated economic backdrop & Teva/Simple sales ramp far enough to diversify DECK out of its concentration on the Ugg line. With the summer season about to ramp, and Decker’s proven merchandise control and brand cachet, it should only go up

Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.