How Deckers Stock Reacted to Its Fiscal Q1 2019 Results



Stock falls

On July 27, Deckers Outdoor Corporation (DECK) stock lost 6.9% of its value since announcing its results on July 26. Deckers beat the consensus estimate for its top line and also reported a narrower EPS loss than its Wall Street estimates. 

However, after the company’s announcement, Stifel cut its rating on Deckers to “hold” from “buy.” According to a Benzinga report, Stifel analyst Jim Duffy stated that although the strong first-quarter numbers reflect the company’s ongoing implementation of strategic growth endeavors, the possibility of a meaningful upside could be limited for Deckers. As a result, Duffy downgraded the stock.

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Deckers surged over 38.4% to $111.03 on a YTD (year-to-date) basis on July 27, driven by its strategic initiatives. The company has been streamlining its store footprint, enhancing the efficiency of its corporate processes, and optimizing the supply chain to control costs. For its UGG brand, the company is “deseasonalizing” the business and is focused on its spring and summer products. The company is augmenting its digital and omnichannel capabilities to grow its sales.

Among its peers, Foot Locker (FL) and DSW (DSW) are up 25.2% and 1.0%, respectively. However, Skechers (SKX) fell 26.0% on July 27. The company’s second-quarter results and subsequent lowering of its third-quarter guidance left investors disappointed, leading to steep losses in its stock price.

Forward PE ratio

On July 27, Deckers Outdoor Corporation (DECK) was trading at a 12-month forward PE (price-to-earnings) ratio of 16.8x. Following its fiscal first-quarter results on July 26, the valuation multiple for Deckers has decreased by 7.7%.

Deckers is trading at a higher valuation multiple than its peers. Foot Locker (FL), Skechers (SKX), and DSW (DSW) were trading at 10.1x, 14.7x, and 16.0x, respectively, on July 27.

In the next article, we’ll assess Deckers’ first-quarter sales performance.


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