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Bull of the Day: Decker's Outdoor (DECK)

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Based in Goleta, CA, Decker’s Outdoor Corp. (DECK - Free Report) is a retailer that specializes in innovative footwear, apparel, and accessories. Decker’s has a unique portfolio of brands that includes UGG, Koolaburra, HOKA ONE ONE, Teva, and Sanuk, and its products are sold in over 50 countries through department and specialty stores, company-owned retail stores, and online.

Better-Than-Expected Q2 Earnings

Recently, Decker’s reported nice results for its second quarter.

Earnings of $2.38 topped the Zacks Consensus Estimate of $1.72 and improved substantially from the $1.54 reported in the prior-year quarter.

Revenues grew 4% to $501.9 million and also came ahead of our consensus estimate. This marked the seventh successive quarter of a positive sales surprise.

Net sales growth benefited greatly from the company’s HOKA ONE ONE brand, as well as a rise in domestic UGG e-commerce sales, Asia-Pacific wholesale sales, and Koolaburra sales.

In the earnings release, CEO Dave Powers said “[T]he Company continues to execute well on our long-term plan of improving levels of profitability. Additionally, our confidence in our strategy, the momentum we see in the business and the strength of the brand portfolio has led us to raise our fiscal year 2019 guidance.”

Revenues are now expected to be in the range of $1.935 billion to $1.960 billion, with earnings in the range of $6.65 to $6.85 per share. The company had earlier guided adjusted earnings in the range of $6.25-$6.45 per share.

Price Performance

Year-to-date, DECK stock has gained around 60%, and shares are up over 88% over the past 12 months. In comparison, the S&P 500 is only up 1.4% and 6%, respectively.

Estimates have been rising lately too, pushing the stock towards a Zacks Rank #1 (Strong Buy).

For the current fiscal year, Decker’s earnings are expected to grow 17.6% year-over-year. The Zacks Consensus Estimate has moved 32 cents higher in the past 60 days from $6.43 to $6.75 cents per share.

Next year looks pretty strong too, and earnings are expected to grow around 9.5%; the consensus estimate sits at $7.39 cents per share, with five upward revisions in the last two months.

Bottom Line

If Decker’s can continue to find success in its core UGG franchise, as well as the booming HOKA brand, the company will be able easily achieve its short- and long-term goals.

For those investors looking for a retail stock to add to their portfolio, DECK should definitely be on the shortlist.

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Update: We are reissuing this article to correct a mistake. The original article should no longer be relied upon.




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