Deckers Outdoor Corp (NASDAQ:DECK)

Deckers is consolidating its brands and is continuing to see its new brands, such as Sanuk, put up strong numbers. The company has a high short interest ratio in the 40% range, which will cause the price to rise when shorts have to cover in upcoming quarters.

fv 60.39

Weather condition in the US is helping sales of UGG Boots. Falling sheepskin costs will translate in better margins.

The news of UGG's demise has been greatly exaggerated.

VF Corporation just announced it will buy Deckers Outdoor Corporation for $78/share. The transaction will close in early 2013.

Sanuk brand has huge growth potential, they dominate the hanging footwear space.

Massive value trap. Brand is dying.

This UGG fire sale has been advertised to me daily on Facebook for this entire month:
http://www.uggstore-canada.net/

If you're selling your entire line of boots for 35-60% in November, you know you've got demand issues.

they are going to crush it with holiday sales this year. thumb it down in march

Great brand, poor weather, own distribution, better marketing

I like this company. Their product line is extensive and has great name recognition. They have very little debt and plenty of cash on hand. Once we see another cold winter I think this stock should shoot up nicely.

EPS 2011=5.16
EST. EPS 2012=4.5
Stock price is selling for less than 30
PE=6.66, if they could have a EPS growth rate of 5% DECK could sell for 70+ today and still get a pretty good return for 7 to 10 years. The margin of safety could be more than 50% and with some leverage on using option (put or call), DECK could be a good company to invest in right now.

This stock is cheap but UGG brand is losing popularity. This company needs a pick me up... maybe acquire BEARPAW as this brand is picking up steam (or so it seems).

DECK appears to have found support at $40 which was it's prior consolidation point for most of 2010. It has had a rough year due to increased input costs with the rise in the price of sheepskin as well as the problems in Europe. Each of these appear to be temporary problems which will find relief in the near future. Their domestic sales of their primary brand grew in the double digits, Sanuk appears to have been a timely good buy, there direct online sales are finding traction, and Asian markets offer ample growth opportunity. Given their fundamentals they appear cheap at these prices. Further, the 13 day SMA is about to cross the 50 day SMA and the underlying price just crossed above the 50 day SMA in higher volume for the first time since February. On the weekly chart the price just crossed above the 13 week SMA also for the first time since February.

Deckers Outdoor (DECK) is a seller of niche, luxury footwear. Deckers has 3 main product brands. The most important is UGG Australia, the well known (and expensive) luxury sheepskin footwear. UGGs provide about 62% of Decker's total sales. The second brand is Teva, an outdoor performance footwear brand that started as a sandal label and has been expanded into sports, hiking, and outdoor footwear as well. Teva is around 20% of sales. The third primary product line is Sanuk, a line of sandals and footwear focused on the surfing community. Sanuk was just acquired by Deckers in July of last year and currently is generating 16% of revenues. The remaining few percent are from Decker's "other" brands, including TSUBO (high-end casual footwear) and the since-shuttered Simple line (sustainable footwear, whatever that means), as well as brand licensing for other merchandise like handbags and apparel.
Fast growing, upscale consumer brands can make for great investments - just look at the gains in Apple (AAPL) and Coach (COH) over the last several years. Decker's has clearly fallen into this category. UGGs have been pimped by all kinds of A-list celebrities ranging from Oprah Winfrey to Britney Spears to Tom Brady! Celebrity cache has been a big driver behind Decker's compound annual revenue growth of 26% since 2007. The brand has been so strong that sales still rose 18% during the deep recession year of 2009! Decker's stock soared from below $30 in 2007 to a high of over $115 just last October. The company was on a roll.

This year, however, the good times have slowed down considerably. Decker's stock has seen its value almost cut in half since the beginning of the year. The last 2 quarters in particular have been difficult. UGGs brand, after years of 20-30% year-over-year growth, saw an ever-so-slight sales decline in the most recent quarter. Teva fell into a free fall, with a 17% sales decline. While Decker's top line looked okay (+13% sales growth in Q2), the fact is that without the Sanuk acquisition, sales would have declined 5%!

I believe the best way to approach a prospective investment in Decker's is to determine if the UGGs (and, to a lesser extent, Teva and Sanuk) concepts are styles, fashions, or fads. We've seen examples of all 3 in Magic Formula® Investing (MFI), and the results have been widely disparate.

A primarily "style" product line, like PVH Corp. (PVH), can lead to great investment results when bought at the low valuations MFI uncovers. PVH last showed up in MFI in late 2009 at under $17. One year later, it traded over $42. Today it's near $85!

A "fad" product, on the other hand, can be devastating. Consider the sad story of Heely's (HLYS), the roller-shoe maker. Showing up in MFI during 2008 at prices near $6, this fad product predictably tumbled to under $2, a level it still sits at today.

In my opinion, Decker's falls into a couple categories. UGGs seem like a fashion product, one that is close to a peak but still holds enough appeal to wither gracefully. Teva and especially Sanuk seem to fall more into the "style" category, filling particular niches that are brand sustaining. It does appear that Decker's might have made a mistake diluting the Teva brand into too broad a category range, however.

So, where does this put us? The stock itself, quantitatively, is a cheap one, with a P/E ratio of about 10 and an EBIT/EV earnings yield ratio of 15.6%. Decker's is debt free with nearly $115 million of cash on the balance sheet.

Sales growth is the biggest determinant of success here. If UGG can get back to double-digit growth, Teva levels out, and Sanuk continues to perform well, Decker's is clearly underpriced. Despite last quarter's performance, there is reason to think sales growth can rebound. Domestic sales were up 37% last quarter... it was Europe that killed here, with international sales falling 15%. Although it seems never-ending, at some point I expect that the situation there will bottom and start to rebound. Decker's would benefit materially.

Modeling for a good rebound in 2013, followed by modest growth from there forward, I see Decker's worth about $63, a solid 40% gain from current levels. MagicDiligence has a positive opinion and sees the stock as a decent MFI choice at present.

Get my sheepskins on sale

Bullish technicals and nearing a low P/E

This is my highest conviction pick for 2012! This is a truly outstanding business trading at a huge discount to its intrinsic value. The problems the company is experiencing are just temporary and it’s nothing it can’t recover from. Sheepskin prices can’t rise forever and it won’t be an unusually warm winter every year. In the long run, I am very confident that this company will succeed and patient investors will be rewarded.

http://quotes.barrons.com/DECK

I'm just compelled by the fact that every female acquaintance of my teenage daughter is wearing these things!