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Buckingham Research Upgrades Deckers Outdoor to a ‘Buy’

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Price movement

Deckers Outdoor (DECK) has a market cap of $2.0 billion. It rose 3.4% to close at $60.98 per share on January 18, 2017. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 2.1%, 5.0%, and 10.1%, respectively, on the same day.

DECK is trading 8.5% above its 20-day moving average, 4.3% above its 50-day moving average, and 4.0% above its 200-day moving average.

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Related ETF and peers

The Vanguard Extended Market ETF (VXF) invests 0.05% of its holdings in Deckers Outdoor. The YTD price movement of VXF was 1.5% on January 18.

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

  • Skechers USA (SKX) — $4.0 billion
  • Steve Madden (SHOO) — $2.2 billion
  • Wolverine World Wide (WWW) — $2.2 billion

DECK’s rating

On January 18, 2017, Buckingham Research upgraded Deckers Outdoor’s rating to a “buy” from “neutral” and also set the stock’s price target at $80.00 per share.

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Performance of Deckers Outdoor in fiscal 2Q17

Deckers Outdoor (DECK) reported fiscal 2Q17 net sales of $485.9 million, a fall of 0.21% from the net sales of $486.9 million in fiscal 2Q16. The company’s gross profit margin and income from operations as a percentage of net sales expanded by 50 basis points and 60 basis points, respectively, between fiscal 2Q16 and fiscal 2Q17.

DECK’s net income and EPS (earnings per share) rose to $37.6 million and $1.21, respectively, in fiscal 2Q17, compared with $36.3 million and $1.11, respectively, in fiscal 2Q16. It reported non-GAAP[1. generally accepted accounting principles] EPS of $1.23 in fiscal 2Q17.

DECK’s cash and cash equivalents fell 55.3%, and its inventories rose 92.7% between fiscal 4Q16 and fiscal 2Q17.

Projections

Deckers Outdoor made the following projections for fiscal 2017:

  • net sales growth of -3% to -1.5%
  • gross margin of 47.0%–47.5%
  • EPS of $4.05–$4.25

The company expects net sales growth in the range of -2% to flat for fiscal 3Q17. Next, we’ll discuss Mondelēz International (MDLZ).

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