Deckers Outdoor Corporation (DECK: NYE), the owner of popular brands like UGG and HOKA, is making a strong case for itself as a long-term investment.
Factors Behind Tall Claims:
Here’s a breakdown of the factors driving this optimism:
- Solid Financial Growth: Deckers has a consistent track record of growth, with revenue reaching a record $1.56 billion in Q3 2024, up 16% year-over-year. Earnings per share (EPS) also saw a significant increase of 44% year-over-year.
- Strong Brands and Innovation: Deckers owns a portfolio of well-established brands like UGG and HOKA, which hold a strong reputation in the footwear market. Additionally, the company is constantly innovating and expanding its product lines, catering to the evolving needs of outdoor enthusiasts and casual consumers alike.
- Reasonable Valuation: While DECK has seen impressive growth, its valuation remains reasonable compared to some of its peers. This suggests there’s still room for the stock price to appreciate in the long run.
- Outperformance and Future Potential: Deckers has consistently outperformed the broader market in recent years. Inclusion in the S&P 500 is likely to bring the stock to the attention of a wider investor base, potentially fueling further growth.
Stock Target Advisor’s Analysis on Deckers:
Stock Target Advisor gives a Buy rating to Deckers and with a price target of $802.27. The company’s stock price is expected to edge towards an average target of $785.95 in the next 12 months, according to analysts. The consensus rating among analysts aligns with the Strong Buy category, validating Stock Target Advisor’s optimistic outlook.
However, it would be worth taking note of Deckers’ comparatively high price relative to its intrinsic value and earnings, as well as high volatility. These, along with an overpricing on a cash flow basis relative to peers, call for caution in assessing the stock.
In the Footwear & Accessories sector, analyst sentiment is slightly bullish. This, coupled with Deckers Outdoor Corporation’s standout performance in this sector, further supports the company’s investment thesis.
The Bottom Line:
Deckers Outdoor presents a compelling case for long-term investors. However, as with any investment, conducting your own research and considering your risk tolerance is crucial before making any decisions.
