Buy, Hold or Sell Deckers Stock? Key Tips Ahead of Q4 Earnings

Core Viewpoint - Deckers Outdoor Corporation is set to announce its fourth-quarter fiscal 2025 earnings results on May 22, with investors closely monitoring the company's performance amid market challenges and opportunities [1]. Financial Performance - The Zacks Consensus Estimate for Deckers' revenues is $985.6 million, reflecting a 2.7% increase from the previous year's reported figure [2]. - The company is anticipated to experience a year-over-year decline in earnings, with the Zacks Consensus Estimate for earnings per share (EPS) at 56 cents, indicating a 32.5% decrease from the same period last year [3]. Earnings Estimates - The current EPS estimates for the upcoming quarters are as follows: Q4 2025 at 0.56, Q2 2025 at 0.79, and for the current year at 5.89 [4]. - Deckers has a trailing four-quarter earnings surprise of 36.3%, with the last reported quarter outperforming the Zacks Consensus Estimate by 15.4% [4]. Key Growth Drivers - Deckers' fourth-quarter performance is expected to be supported by innovation and brand expansion, particularly through new product launches for HOKA and UGG, with HOKA revenues projected to rise by 12.1% [6]. - The company's direct-to-consumer (DTC) channels are expanding, enhancing online and in-store experiences, which is expected to boost sales volumes and profit margins [7]. Challenges - Inventory availability, especially for UGG, is a significant concern, with a projected 13.2% decline in UGG sales for the fourth quarter due to earlier order fulfillment constraints [9]. - Increased markdowns and promotional efforts, particularly for HOKA, are likely to negatively impact margins, with gross margins expected to contract by 320 basis points [10]. Stock Performance - Deckers' stock has decreased by 13.1% over the past three months, underperforming the Retail-Apparel and Shoes industry, which has seen a 3.9% increase [11]. - Compared to peers, Deckers has lagged behind Boot Barn Holdings, which has risen by 25.4%, while Adidas and Skechers have seen slight declines [11]. Valuation Metrics - Deckers is currently trading at a forward 12-month price-to-earnings (P/E) multiple of 19.47, which is above the industry average of 17.96 but below its median P/E of 28.53 over the past year [12]. - The stock is trading at a discount to Boot Barn and Adidas, which have forward P/E multiples of 25.30 and 24.90, respectively, but at a premium to Skechers, which has a forward P/E of 16.71 [13]. Investment Outlook - The company faces a balance between growth momentum in key brands and operational pressures that may affect profitability, suggesting that investors may consider waiting for clearer signals from the upcoming earnings report before making investment decisions [15].