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How Deckers Outdoor’s Valuation Stacks Up against Its Peers’

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Forward PE

On July 18, Deckers Outdoor (DECK) was trading at a 12-month forward PE ratio of 18.0x. Deckers is trading at a higher valuation multiple than its peers. Foot Locker (FL), Skechers (SKX), and DSW (DSW) are trading at PE ratios of 11.3x, 14.0x, and 16.6x, respectively, as of July 18.

Forward PE is determined by dividing a stock’s price by Wall Street’s projections for it over the next four quarters. It’s one of the most highly used metrics for making investment decisions.

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Analysts’ growth projections

Analysts expect Deckers’ fiscal 2019 sales to be $1.94 billion, up 1.7%, while its EPS are expected to rise 10.1% to $6.31 on an adjusted basis. Deckers’ UGG brand sales are expected to take a hit mainly due to store closures. Normalized weather expectations in fiscal 2019 could also affect its sales numbers.

Analysts expect Foot Locker’s sales to rise a mere 0.1% to $7.79 billion and its adjusted EPS to rise ~10% to $4.52 in 2018. Foot Locker has been focusing on improving its digital business and optimizing its supply chain. It’s testing off-mall retail outlets and foraying into the apparel category to boost its sales performance.

Analysts expect Skechers’ sales to rise 13.6% to $4.7 billion and its adjusted EPS to rise 18.5% to $2.11 in 2018. The company’s focus on product innovation and its profitable kids’ footwear category should cushion its sales growth. Also, its digital business and overseas operations are gaining strong traction.

Analysts expect DSW’s sales to fall 1.4% to $2.8 billion and its adjusted EPS to rise 6.5% to $1.62 in 2018. DSW is focused on its digital efforts and kids category business expansion to augment sales. DSW has added the kids’ category to its entire store base just in time for this year’s back-to-school season.

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