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Bull of the Day: Deckers Outdoor (DECK)

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Deckers Outdoor Corp. (DECK - Free Report) is a retail holding company that owns popular performance and luxury shoe brands UGG, Teva, Sanuk, Koolaburra, and Hoka One One. Their products are sold through specialty domestic retailers, international distributors, and online and in catalogs.

Shares Pop on Great Q3 Earnings

When Deckers reported third-quarter results last month, shares climbed as much as 12.4% on the good numbers.

Sales increased over 7% year-over-year to $938.7 million and EPS hit $7.14 a share, both easily beating consensus estimates. UGG sales rose 2.8% to $781.1 million, but the real standout was Hoke One One; the running shoe brand saw quarterly sales soar over 63% compared to the prior-year quarter. Koolaburra also saw a double-digit sales increase of 94% year-over-year to $39 million.

"Our third quarter results were driven by three of our brands experiencing record levels of quarterly revenue, resulting in an updated outlook that reflects another year of strong top-line growth and earnings expansion,” said CEO Dave Powers.

Deckers now expects full-year fiscal 2020 sales to fall between $2.15 billion and $2.16 billion, up from $2.115 billion to $2.14 billion; full-year EPS guidance was also raised to $9.40 to $9.50 per share versus the prior forecast of $8.90 to $9.05.

 

Deckers Outdoor Corporation Price and Consensus

 

Shares of Deckers are up over 28% in the last six months, thanks to investor optimism after the company’s Q3 earnings. Comparatively, the S&P 500 has returned about 15.7%. Earnings estimates have been rising too, and Deckers is a Zacks Rank #1 (Strong Buy) pick right now.

For the current fiscal year, five analysts have revised their bottom line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has moved up 47 cents from $9.07 to $9.54. 2020 looks pretty strong too, with earnings expected to continue positive year-over-year growth.

Q3 showed investors and analysts both the continued effectiveness of Decker’s marketing strategy and the popularity of its products. With Hoka, the company has been able to partner with trendy lifestyle brands like Opening Ceremony, and management expects more international growth for the performance shoe; Hoka units sold internationally surpassed domestic sales for the first time in the third quarter.

If you’re an investor searching for a broader retail stock to add to your portfolio, make sure to keep DECK on your shortlist.

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