Group 1 - Deckers Outdoor (NYSE: DECK) is known for its brands such as HOKA and UGG and has experienced impressive growth, with stock trading at record highs in 2025 [1] - However, a series of external events have negatively impacted the company's momentum, leading to a decline in share price since January [1] Group 2 - The company is characterized by growth in revenue, earnings, and free cash flow, which are key investment criteria [1] - Deckers Outdoor is recognized for having excellent growth prospects and favorable valuations [1] - The company is preferred for its steady growth, high free cash flow margins, dividend stocks, and generous share repurchase programs [1]

Core Viewpoint - Companies with strong balance sheets are increasingly engaging in stock buybacks as a shareholder-friendly strategy amid market volatility and sector rotations in 2025, indicating management's confidence in their businesses and the undervaluation of their stocks [1] Group 1: Stock Buyback Announcements - Multiple large-cap stocks have announced significant buyback programs, with one consumer discretionary company having buyback capacity equal to nearly 16% of its market cap, reflecting high confidence in future performance [2] - Lennox International announced an increase in its buyback capacity to $1 billion, totaling just under $1.3 billion, which is about 6.4% of its market capitalization [3] - Deckers Outdoor increased its buyback authorization to approximately $2.5 billion, equating to 15.8% of its market capitalization, indicating a strong ability to reduce outstanding shares [7] Group 2: Financial Performance and Metrics - Lennox International's operating margin expanded from around 14% in 2022 to nearly 19.5% in 2024, with full-year adjusted EPS growing by 54% [4][5] - Deckers Outdoor's stock gained approximately 265% from early 2022 to January 2025 but has since fallen about 53%, prompting the recent buyback authorization [6][8] - Tenaris approved a new share repurchase program valued at $1.2 billion, which is approximately 6.7% of its market capitalization, and has a strong dividend yield of just under 5% [11][12] Group 3: Cash Reserves and Future Buyback Capacity - Deckers Outdoor has a cash balance of just under $1.9 billion and only $277 million in debt, providing a strong ability to execute its buyback plans [9] - Tenaris ended the last quarter with a net cash balance of $4 billion and generated free cash flow of over $2.1 billion in the last 12 months, allowing it to potentially execute its full buyback capacity without reducing cash reserves [13]

Company Performance - Deckers (DECK) closed at $105.52, down 1.63% from the previous trading session, underperforming the S&P 500 which lost 0.01% [1] - Over the past month, Deckers shares have decreased by 3.47%, lagging behind the Retail-Wholesale sector's gain of 5.26% and the S&P 500's gain of 6.43% [1] Earnings Expectations - The upcoming earnings report is expected to show an EPS of $0.69, reflecting an 8% decline compared to the same quarter last year [2] - Revenue is anticipated to be $899.01 million, indicating an 8.92% increase from the same quarter last year [2] Full Year Estimates - For the full year, analysts expect earnings of $6.12 per share and revenue of $5.37 billion, representing changes of -3.32% and +7.64% respectively from the previous year [3] - Recent changes in analyst estimates suggest optimism about the company's business and profitability [3] Valuation Metrics - Deckers has a Forward P/E ratio of 17.54, which is higher than the industry average of 17.05 [5] - The company has a PEG ratio of 6.45, significantly above the Retail - Apparel and Shoes industry average PEG ratio of 1.93 [6] Industry Ranking - The Retail - Apparel and Shoes industry is ranked 169 in the Zacks Industry Rank, placing it in the bottom 32% of over 250 industries [7] - The Zacks Industry Rank indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [7]

Core Viewpoint - Deckers Outdoor has experienced significant stock losses in 2025, with a nearly 50% decline year-to-date, contrasting with slight gains in the S&P 500, yet the company's fundamentals remain strong, making it appealing for long-term investors [1][8] Financial Performance - Deckers reported mixed fiscal Q4 results, surpassing earnings expectations with Q4 revenue climbing 6.5% to over $1 billion and EPS rising to $1.00 from $0.82, driven by strong brand performance from HOKA and UGG [2] - HOKA saw a 10% increase in Q4 and 23.6% for the total year, while UGG rose by 3.6% and 13.1%, respectively [2] - Management anticipates Q1 sales between $890–$910 million, representing an 8%–10% year-over-year increase [2] Valuation and Fundamentals - DECK is currently trading at a price-to-earnings ratio of about 17x, down from over 32 at the close of 2024, significantly below the S&P 500's current P/E of 26 [3] - The company generates over $1 billion in annual cash flow with a market capitalization of $16 billion, equating to a 6% cash yield, alongside a 16% revenue growth in the past year [4] Growth and Profitability - Revenue has surged at an impressive annual rate of 16.4% over the last three years, more than triple the pace of the S&P 500, with operating margins at 24.9% and net income margins at 19.4% [5] Financial Strength - Deckers has a solid balance sheet with only $276 million in debt and $2.2 billion in cash, resulting in a debt-to-equity ratio of 1.3%, significantly lower than the average S&P 500 company [6] Downturn Resilience - Historically, Deckers has experienced sharper declines than the S&P 500 during market downturns but has shown robust recovery potential, rebounding significantly after past crises [7] Overall Assessment - Deckers is characterized as a high-quality growth company facing temporary challenges, with strong fundamentals, robust brands, a healthy balance sheet, and attractive valuation [8][10]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1][10] Core Insights - The DTC channel is under short-term pressure, and the FY2026 Q1 guidance is below expectations [2][6] - The company reported FY2025 revenue of $4.986 billion, a year-on-year increase of 16.3%, with a gross margin of 57.9% [6][9] - The management expects double-digit revenue growth for FY2026, with HOKA brand growth around 15% and UGG brand growth in the single digits [9] Financial Performance - FY2025 Q4 revenue was $1.022 billion, exceeding market expectations of $1.001 billion, with a year-on-year growth of 6.5% [6] - The gross margin for FY2025 Q4 was 56.7%, up 0.5 percentage points year-on-year, driven by an increase in full-price sales of UGG [6] - The company’s inventory at the end of the quarter was $495.2 million, a year-on-year increase of 4.4% [6] Regional and Channel Performance - In FY2025 Q4, UGG brand revenue was $2.531 billion, a year-on-year increase of 13.1% [6] - DTC channel revenue for FY2025 Q4 was $410 million, a year-on-year decrease of 1.2% [6] - HOKA brand revenue for FY2025 was $2.233 billion, a year-on-year increase of 23.6%, with DTC revenue growth of 23% [6] Future Projections - Revenue projections for FY2026 are estimated at $5.412 billion, with a growth rate of 8.6% [8] - The expected diluted EPS for FY2026 is $6.70, with a projected P/E ratio of 15.6 [8][9] - The company aims to maintain profitability through selective price increases and optimizing production efficiency [9]

Core Viewpoint - Deckers Outdoor Corporation's shares are experiencing a decline following the release of its fourth-quarter financial results for FY25, which, despite beating analyst expectations, led to downgrades from analysts due to increased uncertainty and a soft outlook for Q1 FY26 [1][2][3]. Financial Performance - The company reported fourth-quarter revenue of $1.02 billion, surpassing analyst estimates of $1.01 billion, and earnings of $1 per share, exceeding estimates of 59 cents per share [1]. - For the first quarter of FY26, Deckers expects revenue between $890 million and $910 million, below the estimate of $925.86 million, and earnings between 62 cents and 67 cents per share, compared to the estimate of 81 cents per share [2]. Analyst Downgrades - KeyBanc analyst Ashley Owens downgraded Deckers from Overweight to Sector Weight, citing concerns about HOKA's future sales trajectory and a notable slowdown in growth [3][5]. - Telsey Advisory Group analyst Dana Telsey also downgraded the company to Market Perform from Outperform and reduced the price forecast from $240 to $120 [5]. Market and Strategic Concerns - Analysts highlighted weaker customer acquisition, macroeconomic pressures, and a strategic shift toward wholesale expansion as factors that may dilute brand momentum [4]. - Recent price increases could negatively impact consumer demand, and HOKA's growth has decelerated faster than expected, although UGG's performance helped offset some of this slowdown [6]. Revenue Outlook and Stock Performance - The revenue outlook remains uncertain due to unpredictable consumer responses to pricing increases in the retail sector, with analysts noting potential margin headwinds from a shift toward wholesale and increased tariff costs [6][7]. - Following the downgrades, DECK shares fell by 19.9% to $100.94 [7].

Brand Operations and Sales - Koolaburra brand operations are being phased out, with Koolaburra.com closed as of March 31, 2025, and plans to wind down wholesale operations by the end of 2025[21]. - The Sanuk brand was sold on August 15, 2024, impacting the financial results for the reportable operating segments[22]. - As of March 31, 2025, the company operates 179 global retail stores, including 137 UGG brand stores and 42 HOKA brand stores[34]. - The HOKA brand has seen significant growth, becoming a leading brand in running and outdoor specialty accounts, with expanded marketing efforts driving both domestic and international sales[25]. - Net sales increased 16.3% to $4,985,612, with UGG brand net sales up 13.1% to $2,531,351 and HOKA brand net sales up 23.6% to $2,233,090[193]. - Domestic net sales increased 11.3% to $3,186,709, while international net sales increased 26.3% to $1,798,903[193]. - Total net sales increased by 16.3% to $4,985,612 in 2025 from $4,287,763 in 2024, driven by higher global sales for HOKA and UGG brands[213]. - HOKA brand net sales grew significantly due to increased global demand and market share gains, while UGG brand net sales rose due to strong international demand[216]. Financial Performance - Gross margin increased by 230 basis points to 57.9%[193]. - Income from operations rose 27.1% to $1,179,092, with operating margin increasing by 200 basis points to 23.6%[193]. - Diluted earnings per share increased 30.2% to $6.33 per share[193]. - Net income for fiscal year 2025 was $966,091, reflecting a 27.2% increase from $759,563 in fiscal year 2024[211]. - Gross profit for fiscal year 2025 was $2,885,663, representing a gross margin of 57.9%, up from 55.6% in the previous year[211]. - SG&A expenses increased 17.1% to $1,706,571[193]. - Selling, general, and administrative expenses for fiscal year 2025 were $1,706,571, a decrease of 17.1% compared to $1,457,974 in fiscal year 2024[211]. Supply Chain and Manufacturing - Less than 5% of finished goods for footwear are sourced from China, with the majority coming from Southeast Asia, predominantly Vietnam[46]. - The company maintains a strong regional presence in Southeast Asia to enhance manufacturing processes and ensure quality control[45]. - The company relies on independent manufacturers for production, which poses risks related to quality control and timely fulfillment of orders[98]. - The company sources sheepskin primarily from Australia and processes it in China, with potential supply chain disruptions posing risks to product availability and brand reputation[106]. - The company has experienced elevated inventory levels and uneven flow of receipts and shipments, which could lead to capacity pressures within US warehouses and increase the risk of order cancellations[131]. Employee Engagement and Corporate Responsibility - As of March 31, 2025, the company employed approximately 5,500 employees, reflecting a 14.6% increase compared to March 31, 2024[64]. - The company donated over $6,000 to various non-profit organizations during fiscal year 2025 and employees volunteered approximately 24,000 hours[69]. - The company conducts regular employee engagement surveys, with a participation rate of 91.5% in the latest survey, and 89% of respondents expressed pride in working for the company[66]. - The company offers tuition reimbursement for eligible US employees up to $5,000 per calendar year[72]. - The company has established a Corporate Responsibility, Sustainability & Governance Committee to oversee its ESG strategy and initiatives[58]. Risks and Challenges - A significant portion of the products sold, particularly under the UGG and HOKA brands, are premium retail products, making them highly dependent on consumer confidence and discretionary spending[90]. - The footwear, apparel, and accessories industry is highly competitive, with intense pressure from both established companies and new entrants, which could adversely affect market share and financial performance[92]. - Economic conditions, including inflation and consumer debt levels, may adversely affect consumer spending and demand for premium products[90]. - Supply chain disruptions could lead to manufacturing delays and increased costs, negatively impacting sales and customer relationships[98]. - Changes in consumer preferences and fashion trends can significantly impact market acceptance of both current and new products[97]. - The company faces challenges in managing inventory and working capital due to the extended design and manufacturing process, which can lead to significant liquidity requirements[93]. Strategic Initiatives and Growth - The company is expanding its domestic warehouse and distribution capacity to support growth, particularly for the UGG and HOKA brands[95]. - The company is expanding its retail presence internationally, opening UGG and HOKA brand locations, which is crucial for brand positioning and financial performance[111]. - The company continues to implement international growth strategies for the HOKA and UGG brands, focusing on selective expansion and investment in key markets[198]. - The company plans to continue growing its distribution network to support long-term strategic objectives, but may face headwinds in connection with these efforts[129]. Cybersecurity and Compliance - The company is exposed to risks associated with cyber and data security incidents, which could materially harm its business and reputation[136]. - The company has implemented a comprehensive cybersecurity program to mitigate risks associated with evolving cybersecurity threats[157]. - The company has established a dedicated action team for cybersecurity risk management, integrating it into overall business strategy[159]. - The company may face civil or criminal penalties if found in violation of privacy and security laws, which could increase liabilities and harm its reputation[142]. Market and Economic Factors - The company is subject to various regulatory, operational, and reputational risks related to its international operations, including potential product recalls and regulatory penalties[125]. - The company may incur significant costs to improve climate-related resiliency and comply with evolving regulations, impacting financial condition[116]. - The global minimum tax under OECD's Pillar Two rules may impact the company's income tax expense and profitability beyond fiscal year 2025[150]. - The company is exposed to risks from potential changes in tax laws, which could increase its worldwide tax rate and affect financial results[149].

Core Viewpoint - Deckers Outdoor Corp (NYSE: DECK) has experienced a significant decline of 20.2%, trading at $100.67, after the company refrained from providing a full-year forecast due to economic uncertainty [1]. Financial Performance - Despite better-than-expected fiscal fourth-quarter results, Deckers has faced a series of price-target cuts and downgrades from analysts, with Keybanc lowering its rating to "sector weight" from "overweight" and Telsey Advisory downgrading to "market perform" from "outperform" [2]. - UBS, in contrast, raised its price target for Deckers to $169 [2]. Stock Performance - The current drop positions Deckers for its worst trading day since April 2012, with shares hitting a new 52-week low of $100.70 and reflecting a year-to-date deficit of 50.7% [3]. - Options trading has surged, with 46,000 calls and 29,000 puts traded, which is ten times the typical options volume for this period. The most active option is the weekly 5/30 102-strike call, with new positions being opened [3]. Volatility and Options - The stock's Schaeffer's Volatility Scorecard (SVS) is 97 out of 100, indicating that it has historically outperformed options traders' volatility expectations [4].

Core Viewpoint - Deckers reported fiscal fourth-quarter earnings that exceeded estimates but provided disappointing guidance for the current quarter, leading to a significant drop in stock price [1][4]. Financial Performance - Fiscal fourth-quarter revenue increased by 6.5% to $1.02 billion, aligning closely with estimates of $1.01 billion, a slowdown compared to 16.3% growth for the full year [2]. - Hoka brand sales growth decelerated to 10%, down from 23.6% for the full fiscal year, while Ugg brand growth slowed to 3.6% from 13.1% [2]. - Gross margin improved from 56.2% to 56.7%, and operating income rose by 20.5% from $144.3 million to $173.9 million [3]. - Earnings per share (EPS) increased from $0.82 to $1, significantly surpassing the consensus estimate of $0.61 [3]. Future Guidance - For the first quarter, management anticipates revenue between $890 million and $910 million, below the consensus estimate of $925.3 million, indicating a 9% growth at the midpoint [4]. - Adjusted EPS is projected to be between $0.62 and $0.67, lower than the estimate of $0.79 and down from $0.75 in the same quarter last year [4]. Market Conditions - Management acknowledged that uncertainties related to tariffs would impact business this fiscal year, leading to a lack of guidance due to these uncertainties [5]. - The company has increased its share repurchase authorization, indicating a strategy to take advantage of the stock's decline, which has fallen over 50% from its peak earlier this year [5]. Valuation Perspective - Despite the weak guidance and pressures from the trade environment, the current valuation appears attractive for a company with a history of outperforming the market [6].

Core Insights - Deckers Outdoor Corporation (DECK) reported strong fourth-quarter fiscal 2025 results, driven by the performance of its HOKA and UGG brands, with earnings per share of $1.00, exceeding expectations [1][3] - The company did not provide guidance for fiscal 2026 due to macroeconomic uncertainties, leading to a 15.3% decline in shares during after-market trading [1][15] Financial Performance - Net sales increased by 6.5% year over year to $1,021.8 million, surpassing the consensus estimate of $993 million [3] - Gross profit rose 7.5% year over year to $579.8 million, with a gross margin of 56.7%, up from 56.2% in the prior year [4] - Operating income was $173.9 million, a 20.6% increase from the previous year, with an operating margin of 17% [6] Brand Performance - HOKA brand sales grew by 10% year over year to $586.1 million, while UGG brand sales increased by 3.6% to $374.3 million, exceeding estimates [7] - Other brands, including Teva, AHNU, and Koolaburra, saw a decline in sales by 6.3% to $61.3 million [7] Sales Channels and Geography - Wholesale net sales increased by 12.3% year over year to $611.6 million, while DTC net sales decreased by 1.2% to $410.2 million [8] - Domestic net sales remained flat at $647.7 million, whereas international net sales rose by 19.9% to $374.1 million [8] Financial Position - As of March 31, 2025, cash and cash equivalents were $1.89 billion, with total stockholders' equity at $2.51 billion and no outstanding borrowings [9] - The company repurchased 1.78 million shares for $266 million in the fourth quarter and 3.80 million shares for $567 million in fiscal 2025 [10] Future Outlook - For Q1 fiscal 2026, DECK expects revenues between $890 million and $910 million, with HOKA projected to grow in the low-double digits and UGG in the mid-single digits [13] - Gross margin is anticipated to decline by 250 basis points due to higher freight costs and increased promotional activity [13] - SG&A expenses are expected to rise slightly faster than revenues, reflecting continued investments in brand marketing [14]