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Is Deckers (DECK) Likely to Register Higher Q2 Earnings?

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Deckers Outdoor Corporation (DECK - Free Report) is slated to report second-quarter fiscal 2019 results on Oct 25. In the last four quarters, this Goleta, CA-based footwear and apparel retailer outperformed the Zacks Consensus Estimate by an average of 71.9%. Investors are counting on another beat by Deckers in the to-be-reported quarter. Let’s delve deeper into the factors that will be influencing the results.

How Are Estimates Shaping Up?

The Zacks Consensus Estimate for second-quarter earnings is pegged at $1.72 compared with $1.54 in the year-ago quarter. We note that the Zacks Consensus Estimate has improved by a couple of cents in the last seven days. Analysts polled by Zacks now project revenues of $496.2 million, showing an improvement of approximately 3% from the year-ago quarter.

If all goes well, this will be the seventh straight quarter of top and bottom-line beats for the company.

Factors Playing Key Role

Deckers is targeting profitable markets and is focused on product innovation as well as store augmentation plan. Further, the company’s focus on expanding brand assortments, bringing more innovative line of products, targeting consumers through marketing and optimizing omni-channel distribution bodes well.

In keeping with the changing trends, Deckers has made substantial investments to strengthen online presence and open smaller concept omni-channel outlets. Additionally, the company has undertaken strategic initiatives to drive long-term growth. Its store-fleet optimization plan focuses on striking the right balance between digital and physical stores.

Management had earlier guided second-quarter net sales in the range of $485-$495 million compared with $482.5 million a year ago. The company had estimated earnings in the band of $1.60-$1.70.

However, industry experts are concerned about Deckers' over-reliance on the UGG brand. In the event of stagnation or decline in UGG sales growth, the company's overall results will be affected. This is because the percentage of contribution from the company’s other brands are too minimal to offset any slowdown in UGG sales.

The Zacks Consensus Estimate for Sanuk brand revenues is $16 million, reflecting an increase of about 5%, while the same for Teva brand is $19.5 million, indicating a decline of approximately 9% year over year. Sales from UGG brand are expected at $400 million, almost flat compared with the prior-year period.

Deckers Outdoor Corporation Price, Consensus and EPS Surprise
 

Deckers Outdoor Corporation Price, Consensus and EPS Surprise | Deckers Outdoor Corporation Quote

What the Zacks Model Unveils

Our proven model shows that Deckers is likely to beat estimates this quarter. This is because a stock needs to have both — a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Deckers has an Earnings ESP of +4.85% and a Zacks Rank #1. This makes us reasonably confident that it is likely to outperform estimates.

Other Stocks With Favorable Combination

Here are a few other companies you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat:

Boot Barn Holdings (BOOT - Free Report) has an Earnings ESP of +3.70% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Five Below (FIVE - Free Report) has an Earnings ESP of +5.26% and a Zacks Rank #2.

Foot Locker (FL - Free Report) has an Earnings ESP of +1.00% and a Zacks Rank #3.

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