Guggenheim Has Given Deckers Outdoor a ‘Neutral’ Rating

Deckers Outdoor (DECK) has a market cap of $1.9 billion. It rose 0.42% to close at $59.55 per share on September 30, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -4.3%, -8.9%, and 26.2%, respectively, on the same day.

DECK is trading 2.3% below its 20-day moving average, 6.2% below its 50-day moving average, and 5.8% above its 200-day moving average.

The Vanguard Extended Market ETF (VXF) invests 0.05% of its holdings in Deckers Outdoor. The ETF tracks a market-cap-weighted version of the S&P Total Market Index, excluding all S&P 500 stocks. The YTD price movement of VXF was 10.0% on September 30, 2016.

The market caps of Deckers Outdoor’s competitors are as follows:

• Skechers USA (SKX): $3.6 billion
• Wolverine World Wide (WWW): $2.3 billion
• Steve Madden (SHOO): $2.1 billion

Guggenheim has initiated coverage of Deckers Outdoor with a “neutral” rating.

Deckers Outdoor reported fiscal 1Q17 net sales of $174.4 million, a fall of 18.4% compared to $213.8 million in fiscal 1Q16. The company’s gross profit margin rose 8.0% in fiscal 1Q17 compared to the prior year’s period.

Its net income and EPS (earnings per share) fell to -$58.9 million and -$1.84, respectively, in fiscal 1Q17 compared to -$47.3 million and -$1.43, respectively, in fiscal 1Q16.

DECK’s cash and cash equivalents fell 17.8%, and its inventories rose 56.5% in fiscal 1Q17 compared to fiscal 4Q16. Its current ratio fell to 2.3x, and its debt-to-equity ratio rose to 0.48x in fiscal 1Q17 compared to 3.3x and 0.32, respectively, in fiscal 4Q16.

Deckers Outdoor has made the following projections for fiscal 2017:

• rise in net sales of -3% to flat
• gross margin of 47.0%–47.5%
• EPS of $4.05–$4.40, which excludes any pretax charges from restructuring charges of $10 million–$15 million

The company has made the following projections for fiscal 2Q17:

• rise in net sales of 1%–3%
• EPS of $1.12–$1.22

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