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Assessing Deckers Outdoor’s Valuation After Strong Earnings and Softer DTC Trends

Simply Wall St · 3d ago

Deckers Outdoor (DECK) just posted quarterly results that beat expectations on both revenue and earnings, yet the stock keeps lagging the S&P 500, as investors fixate on a drop in direct to consumer sales.

See our latest analysis for Deckers Outdoor.

At around $100.71, the latest 1 month share price return of 26.14 percent looks like a short term rebound within a much weaker year to date share price return of 50.76 percent and 1 year total shareholder return of 50.86 percent. However, the 3 year and 5 year total shareholder returns of 54.93 percent and 101.29 percent show the longer term growth story is still intact.

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With solid earnings, steady top line growth, and a modest discount to analyst targets, has Deckers slipped into undervalued territory after a sharp pullback, or is the market already baking in its next leg of growth?

Most Popular Narrative Narrative: 10.1% Undervalued

With Deckers last closing at $100.71 versus a narrative fair value near $112, the prevailing view sees room for upside if execution holds.

The continued investment in direct to consumer (DTC) operations and expansion into new markets with selective retail partnerships is expected to enhance margins by reducing reliance on wholesale channels and increasing full price sales with higher margin direct sales strategies.

Read the complete narrative.

Curious how modest earnings growth, stable margins, and a richer future multiple are stitched together to justify that premium valuation? The full narrative unpacks the exact revenue path, the margin reset, and a punchy earnings multiple that has to hold for this upside case to work.

Result: Fair Value of $111.97 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, that upside relies on resilient brand heat, with any prolonged DTC softness or a more promotional environment potentially squeezing margins and undermining the growth case.

Find out about the key risks to this Deckers Outdoor narrative.

Build Your Own Deckers Outdoor Narrative

If you see the story differently or want to dive into the numbers yourself, you can build a custom narrative in minutes: Do it your way.

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Deckers Outdoor.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.