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Bull of the Day: Deckers (DECK)

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Deckers Brands (DECK - Free Report) recently crushed quarterly earnings and raised full year guidance. This Zacks Rank #1 (Strong Buy) is expected to grow earnings in fiscal 2018 by the double digits.

Deckers makes footwear, apparel and accessories and is best known for owning the UGG brand. But it also designs Koolabburra, HOKA ONE ONE, Teva and Sanuk brands.

It sells in department stores, online and in Company-owned and operated retail stores.

Big Holiday Quarter

On Feb 1, Deckers reported its fiscal third quarter 2018 results which included the all-important holiday quarter and it crushed the Zacks Consensus Estimate by 29.4%.

Earnings were $4.97 versus the Zacks Consensus of just $3.84.

Sales rose 6.6% to %810.5 million from $760.3 million in the year ago quarter.

Gross margin also rose to 52.2% from 50.5% in the year ago period.

It saw stronger full price selling during the key holiday season. Favorable weather, i.e. cold and snowy, also contributed to the year-over-year improvement.

UGG is still it's largest brand and those sales rose 4.3% to $734.7 million. HOKA ONE ONE, however, saw significant growth in the quarter, as sales rose 65.7% to $31.8 million from $19.2 million.

Teva sales also jumped nicely, rising 33.4% to $19.5 million from $14.6 million a year ago.

Sanuk was the laggard as sales managed to finish flat at $13.9 million.

International Sales Were Hot

While domestic US business remains the driving force, international sales challenged in the third quarter.

Domestic sales rose 2.5% to $501.7 million while international sales jumped 14% to $308.8 million, up from $270.8 million in the year ago period.

Raised Full Year Guidance

Given the strong holiday quarter, which was better than the company had expected, it's not surprising that it raised its fiscal 2018 full year guidance.

Earnings are expected to be in the range of $5.37 to $5.42.

As a result, the analysts have raised their estimates with 6 estimates rising in the last 30 days.

The Zacks Consensus for Fiscal 2018 jumped to $5.27 from $4.30 just 90 days ago. Deckers made $3.82 just a year ago, so that is earnings growth of 38%.

The analysts are bullish about fiscal 2019 too, but are being more conservative. Earnings are expected to rise, but just another 9.9%.

Shares Soar to Multi-Year Highs

It's been a tough couple of years for Deckers as earnings fell when the company's trendy UGG boots went out of favor briefly. But it clearly has gotten its trend mojo back.

The last time I wrote about Deckers as a Zacks Rank #1 (Strong Buy) was in 2014. Now, in 2018, it's back at that status.

Shares have been on a big rally. Over the last year, they're up 81%.

It looks like new 5-year highs could be next.



But they're still not that expensive, at least on a P/E basis. Deckers trades with a forward P/E of 18.2.

If you're looking for a retail play with strong earnings and sales growth, then Deckers is one to keep on your short list.

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