Core Insights - The Motley Fool aims to enhance the intelligence, happiness, and wealth of individuals globally [1] Company Overview - Founded in 1993, The Motley Fool is a financial services company [1] - The company reaches millions of people monthly through various channels including premium investing solutions, free guidance, market analysis on Fool.com, top-rated podcasts, and its non-profit arm, The Motley Fool Foundation [1]

Core Viewpoint - Deckers Outdoor's stock experienced a significant decline of 21.4% in February following the release of its fiscal third-quarter results, despite beating estimates and raising guidance [1][2]. Financial Performance - Deckers reported fiscal third-quarter results on January 30, 2025, exceeding expectations and raising its guidance, yet the stock price fell sharply [2]. - For the upcoming fiscal fourth quarter, Deckers anticipates net sales of approximately $936 million, down from $960 million in the same quarter of fiscal 2024 [3]. - The company expects a gross margin of about 52% for Q4, a decrease from over 56% in the prior-year period, indicating potential challenges in growth and margins [4]. Market Context - Deckers has been publicly traded for 30 years and is guiding for a record-high gross margin of 57% for fiscal 2025, attributed to high average selling prices and lower wholesale sales [5]. - The CFO of Deckers cautioned that the current high levels of full-price selling and low wholesale closeouts are not sustainable, suggesting a potential normalization in future performance [6]. Industry Trends - Shoe retailers, including Foot Locker, have noted a shift in consumer behavior towards seeking discounted shoes, which poses challenges for the entire footwear sector, including Deckers [7]. - Despite current challenges, Deckers projects a 15% growth in net sales for fiscal 2025 and aims for a record gross margin of over 57%, indicating a robust business outlook [7]. Future Outlook - The key question for Deckers is the potential for growth in fiscal 2026 and beyond, where even moderate growth could lead to favorable stock performance given the company's financial strength and reduced valuation [8].

Core Viewpoint - Deckers Outdoor Corporation (DECK) is currently trading at a premium valuation compared to industry averages, suggesting potential overvaluation despite strong fundamentals and growth prospects [1][2][3]. Valuation - DECK is trading at a forward 12-month price-to-sales (P/S) multiple of 3.91X, significantly higher than the Zacks Retail-Apparel and Shoes industry's average of 1.61X and the Retail-Wholesale sector's 1.63X [1]. - The stock is above its five-year median P/S level of 3.24, indicating a premium valuation [1]. Recent Performance - DECK shares closed at $139.36, experiencing a 17.8% decline over the past month, compared to a 9.4% decline in the industry [3]. - The recent stock price drop is attributed to revenue slowdown and inventory constraints, particularly for the UGG brand, alongside potential gross margin pressure in the fourth quarter [4]. Brand Performance and Growth Opportunities - Deckers is enhancing brand assortments and optimizing distribution channels, with UGG and HOKA brands showing strong sales growth of 16.1% and 23.7% year-over-year, respectively [5][7]. - The direct-to-consumer (DTC) business is a major growth driver, with DTC net sales increasing 17.9% to $1.01 billion in the fiscal third quarter [8]. - International expansion, particularly in high-potential regions like China, is expected to accelerate revenue growth [9]. Financial Strength - Deckers maintains a strong financial position with a debt-free balance sheet and cash reserves of $2.24 billion as of December 31, 2024 [11]. - The company repurchased approximately 275 thousand shares for $44.7 million, with $640.7 million remaining under its share repurchase authorization [11]. Future Outlook - Total revenues are projected to increase by 15% year-over-year to $4.9 billion, with HOKA expected to grow by 24% and UGG by 10% [12]. - The gross margin is anticipated to reach or slightly exceed 57%, with earnings per share (EPS) guidance raised to $5.75-$5.80 [13]. Analyst Sentiment - Analysts have positively revised earnings estimates, with the consensus estimate for the current fiscal year at $5.89 per share, reflecting a year-over-year growth rate of 21.2% [14]. - Sales estimates for the current and next fiscal years are projected at $4.96 billion and $5.46 billion, indicating growth rates of 15.6% and 10.1%, respectively [15]. Competitive Position - Despite trading at a premium, Deckers is viewed as a compelling investment opportunity due to strong brand momentum and growth strategies [18].

Core Viewpoint - Growth investors are increasingly focused on stocks with above-average financial growth, which can lead to solid returns, but identifying such stocks is challenging due to inherent volatility and risks [1] Group 1: Company Overview - Deckers (DECK) is highlighted as a strong growth stock, possessing a favorable Growth Score and a top Zacks Rank [2][10] Group 2: Earnings Growth - Deckers has a historical EPS growth rate of 30.1%, with projected EPS growth of 21.1% for the current year, surpassing the industry average of 14.4% [5][4] Group 3: Cash Flow Growth - The year-over-year cash flow growth for Deckers stands at 49.7%, significantly higher than the industry average of -13.5% [6] - The annualized cash flow growth rate for Deckers over the past 3-5 years is 21.7%, compared to the industry average of 4.7% [7] Group 4: Earnings Estimate Revisions - There has been a positive trend in earnings estimate revisions for Deckers, with the Zacks Consensus Estimate for the current year increasing by 5.1% over the past month [8] Group 5: Investment Potential - Deckers has achieved a Growth Score of A and a Zacks Rank 1, indicating its potential as an outperformer and a solid choice for growth investors [10]

Group 1 - Deckers (DECK) has experienced significant selling pressure, resulting in a 29% decline in stock price over the past four weeks, but analysts anticipate better earnings than previously predicted [1] - The stock is currently in oversold territory, indicated by a Relative Strength Index (RSI) reading of 26.26, suggesting a potential reversal in trend [5] - There has been a 7.2% increase in the consensus EPS estimate for DECK over the last 30 days due to a strong agreement among sell-side analysts, which typically correlates with price appreciation [6] Group 2 - DECK holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, indicating a strong potential for a turnaround [7]

Core Viewpoint - Investors are increasingly seeking growth stocks that demonstrate above-average growth potential, with Deckers (DECK) identified as a strong candidate due to its favorable growth metrics and Zacks Rank [2][10]. Group 1: Earnings Growth - Deckers has a historical EPS growth rate of 30.1%, with projected EPS growth of 19.9% for the current year, surpassing the industry average of 15.3% [5]. Group 2: Cash Flow Growth - The year-over-year cash flow growth for Deckers stands at 49.7%, significantly higher than the industry average of -10.7% [6]. - The historical annualized cash flow growth rate for Deckers over the past 3-5 years is 21.7%, compared to the industry average of 4.7% [7]. Group 3: Earnings Estimate Revisions - There has been an 8% upward revision in current-year earnings estimates for Deckers over the past month, indicating positive momentum [9].

Core Viewpoint - Deckers Outdoor Corporation has reported strong third-quarter fiscal 2025 results, driven by the performance of its HOKA and UGG brands, leading to an optimistic outlook for the fiscal year [1][2][4]. Financial Performance - Deckers achieved a 23.7% year-over-year increase in HOKA sales, totaling $530.9 million, surpassing the projected $514 million [2]. - UGG brand net sales grew by 16.1% to $1,244 million, exceeding the estimate of $1,082.8 million [2]. - The company ended the quarter with a cash position of $2,240.9 million and no outstanding borrowings, indicating strong financial health [3]. - Inventory levels were managed well at $576.7 million, reflecting a 7% year-over-year increase [3]. Future Outlook - Deckers anticipates a 15% increase in fiscal 2025 net sales, reaching $4.9 billion, with HOKA expected to grow by around 24% and UGG by 10% [4]. - Earnings per share for fiscal 2025 are projected to be between $5.75 and $5.80, up from $4.86 reported last year [4]. Analyst Consensus - The Zacks Consensus Estimate for earnings per share has been revised upward by 2.6% to $5.83 for the current fiscal year and by 0.9% to $6.55 for the next fiscal year [5]. - However, estimates for the final quarter of fiscal 2025 have been lowered by 18.3% to 58 cents due to anticipated slower growth and increased cost pressures [6]. Market Positioning - Deckers is well-positioned in the competitive retail apparel and shoes industry, with a strong brand portfolio and innovative product launches [9][10]. - The company has been expanding its global footprint, particularly in Europe and China, with international net sales rising 28.5% to $657.9 million in Q3 [12]. - Direct-to-consumer net sales advanced 17.9% to $1,011 million, with comparable net sales surging 18.3% [12]. Stock Valuation - Despite a recent 17% decline in stock price, Deckers trades at a premium with a forward price-to-earnings ratio of 26.71, higher than the industry average of 20.19 [13][14].

Financial Performance - Net sales for the three months ended December 31, 2024, were $1,827,165, an increase of 17.1% compared to $1,560,307 for the same period in 2023[17]. - Gross profit for the nine months ended December 31, 2024, was $2,305,895, representing a 24.8% increase from $1,846,012 in the prior year[17]. - Net income for the three months ended December 31, 2024, was $456,734, up 17.1% from $389,919 in the same period last year[17]. - Net income for the nine months ended December 31, 2024, was $814,680,000, an increase from $632,018,000 in the same period of 2023, representing a growth of approximately 29%[24]. - Diluted earnings per share increased by 32.3% to $5.33 per share[88]. - Income from operations grew by 28.3% to $1,005,167 for the nine months ended December 31, 2024[88]. - Net income increased by 28.9% to $814,680 million, with net income per share rising by 31.8% to $5.35[115]. Assets and Liabilities - Total current assets increased to $3,274,112 as of December 31, 2024, compared to $2,443,483 as of March 31, 2024, reflecting a growth of 34%[16]. - Total liabilities rose to $1,333,434 as of December 31, 2024, from $1,028,111 as of March 31, 2024, indicating an increase of 29.7%[16]. - The company’s total assets reached $3,964,353 as of December 31, 2024, compared to $3,135,579 as of March 31, 2024, marking an increase of 26.4%[16]. - The company’s retained earnings increased to $2,424,898 as of December 31, 2024, from $1,913,615 as of March 31, 2024, reflecting a growth of 26.7%[16]. - Cash and cash equivalents increased to $2,240,923 as of December 31, 2024, compared to $1,502,051 as of March 31, 2024, a growth of 49.3%[16]. Sales Channels and Growth - Direct-to-Consumer (DTC) net sales rose by 19.4% to $1,719,569 million, reflecting strong consumer acquisition and retention[116]. - Wholesale channel net sales rose by 18.9% to $2,244,263, while Direct-to-Consumer (DTC) channel net sales increased by 19.4% to $1,719,569[88]. - International net sales surged by 28.1% to $1,424,775, contributing to a total of 36.0% of net sales for the three months ended December 31, 2024[78]. - The HOKA brand continues to gain traction, contributing to a more even distribution of sales throughout the year, which is expected to reduce the impact of seasonality on overall performance[30]. Expenses - Selling, general, and administrative expenses for the nine months ended December 31, 2024, were $1,300,728, up 22.4% from $1,062,760 in the previous year[17]. - Selling, General, and Administrative (SG&A) expenses increased by 22.4% to $1,300,728 million, primarily due to higher variable advertising and promotion expenses[115]. - The company reported a depreciation, amortization, and accretion expense of $50,911,000 for the nine months ended December 31, 2024, compared to $40,901,000 in the previous year, which is an increase of approximately 24%[24]. Stock and Shareholder Actions - The company repurchased common stock totaling $301,011,000 during the nine months ended December 31, 2024, compared to $310,635,000 in the same period of 2023[24]. - A six-for-one forward stock split was executed on September 13, 2024, increasing the number of authorized shares from 125 million to 750 million[32]. - As of December 31, 2024, the Company has $640,692,000 remaining approved for stock repurchases under its program[69]. - The Company has a total unrecognized stock-based compensation of $50,375,000 as of December 31, 2024, with a weighted average remaining vesting period of 1.2 years for RSUs and 1.0 year for LTIP PSUs[65]. Other Comprehensive Income and Tax - The company recorded a gain of $6,575,000 in other comprehensive income (OCI) for the three months ended December 31, 2024, compared to a loss of $1,318,000 in 2023[68]. - For the nine months ended December 31, 2024, the income tax expense was $237,327, with an effective income tax rate of 22.6%[50]. - The effective income tax rate for the three months ended December 31, 2024, was 21.8%, slightly down from 21.9% in 2023[50]. Strategic Changes - The company completed the sale of the Sanuk brand on August 15, 2024, which did not represent a strategic shift affecting consolidated results[39]. - Deckers plans to phase out standalone operations for the Koolaburra brand by the end of the current fiscal year, with a complete wind-down expected throughout calendar year 2025[40]. - The Koolaburra brand's standalone operations are being phased out to focus on more significant organic opportunities[90].

Core Viewpoint - Deckers (DECK) has experienced a significant downtrend, with a stock decline of 14.4% over the past four weeks, but it is now in oversold territory, suggesting a potential turnaround due to analysts' positive earnings outlook [1] Group 1: Technical Indicators - The Relative Strength Index (RSI) is a key technical indicator used to identify oversold stocks, with a reading below 30 typically indicating oversold conditions [2] - DECK's current RSI reading is 27.7, indicating that the heavy selling pressure may be exhausting itself, which could lead to a reversal in the stock's trend [5] Group 2: Fundamental Indicators - There is a strong consensus among sell-side analysts regarding DECK's earnings estimates, with a 7.8% increase in the consensus EPS estimate over the last 30 days, suggesting potential price appreciation [6] - DECK holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks, indicating a favorable outlook for a near-term turnaround [7]

Market Overview - Major U.S. equities indexes closed lower on the last trading day of January 2025, despite a positive start to the month [2][3] - The S&P 500 fell by 0.5%, the Nasdaq decreased by 0.3%, and the Dow Jones Industrial Average dropped by 0.8% [3][7] Company Performances - Franklin Resources (BEN) was the top performer in the S&P 500, surging by 10.4% after reporting earnings that exceeded analyst projections, despite revenue falling short [3][7] - AbbVie (ABBV) stock increased by 4.7% following strong sales of its Skyrizi and Rinvoq treatments, along with an improved long-term sales outlook [4] - Vertex Pharmaceuticals (VRTX) rose by 5.3% after receiving FDA approval for its non-opioid pain treatment, Journavx [4] Decliners - Deckers Outdoor (DECK) led the S&P 500 decliners, falling by 20.4% due to concerns over its full-year revenue guidance amid competitive pressures and high shipping costs [5][7] - Walgreens Boots Alliance (WBA) shares dropped by 10.3% after the company suspended its dividend to fund a long-term turnaround, citing needs for cash for litigation and debt refinancing [6] - Colgate-Palmolive (CL) shares fell nearly 4.7% as the company missed earnings expectations, with a 7% decline in sales in Latin America attributed to worsening foreign exchange rates [6] - Las Vegas Sands (LVS) decreased by 5% after giving back gains from previous sessions related to growth optimism in China [6][7]