Deckers (DECK)

Footwear and apparel conglomerate Deckers (NYSE:DECK) announced better-than-expected revenue in Q4 CY2025, with sales up 7.1% year on year to $1.96 billion. The company’s full-year revenue guidance of $5.41 billion at the midpoint came in 0.9% above analysts’ estimates. Its GAAP profit of $3.33 per share was 20.5% above analysts’ consensus estimates.

Company Overview

Established in 1973, Deckers (NYSE:DECK) is a footwear and apparel conglomerate with a portfolio of lifestyle and performance brands.

Before the advent of the internet, styles changed, but consumers mainly bought shoes by visiting local brick-and-mortar shoe, department, and specialty stores. Today, not only do styles change more frequently as fads travel through social media and the internet but consumers are also shifting the way they buy their goods, favoring omnichannel and e-commerce experiences. Some footwear companies have made concerted efforts to adapt while those who are slower to move may fall behind.

Deckers primary competitors include Nike (NYSE:NKE), Vans and Timberland (owned by VF Corporation NYSE:VFC), Columbia Sportswear Company (NASDAQ:COLM), Merrell (owned by Wolverine World WideNYSE:WWW), and Skechers (NYSE:SKX).

A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, Deckers grew its sales at a 17.9% annual rate. Although this growth is acceptable on an absolute basis, it fell slightly short of our standards for the consumer discretionary sector, which enjoys a number of secular tailwinds.

We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or trend. Deckers’s recent performance shows its demand has slowed as its annualized revenue growth of 14.2% over the last two years was below its five-year trend.

We can better understand the company’s sales dynamics by analyzing its constant currency revenue, which excludes currency movements that are outside their control and not indicative of demand. Over the last two years, its constant currency sales averaged 15% year-on-year growth. Because this number aligns with its normal revenue growth, we can see that Deckers has properly hedged its foreign currency exposure.

This quarter, Deckers reported year-on-year revenue growth of 7.1%, and its $1.96 billion of revenue exceeded Wall Street’s estimates by 4.7%.

Looking ahead, sell-side analysts expect revenue to grow 5.2% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and indicates its products and services will face some demand challenges.

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

Deckers’s operating margin might fluctuated slightly over the last 12 months but has remained more or less the same, averaging 23.7% over the last two years. This profitability was lousy for a consumer discretionary business and caused by its suboptimal cost structure.

This quarter, Deckers generated an operating margin profit margin of 31.4%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Deckers’s EPS grew at an unimpressive 27% compounded annual growth rate over the last five years. This performance was better than its flat revenue but doesn’t tell us much about its business quality because its operating margin didn’t improve.

In Q4, Deckers reported EPS of $3.33, up from $3 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Deckers’s full-year EPS of $7.08 to shrink by 5.7%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Deckers has shown poor cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 10.9%, lousy for a consumer discretionary business.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Although Deckers hasn’t been the highest-quality company lately because of its poor top-line performance, it found a few growth initiatives in the past that worked out wonderfully. Its five-year average ROIC was 75.6%, splendid for a consumer discretionary business.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Deckers’s ROIC has increased significantly. This is a good sign, and we hope the company can keep improving.

We were impressed by how significantly Deckers blew past analysts’ constant currency revenue expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. Looking ahead, the company raised full-year revenue guidance, and full-year EPS guidance also beat. Zooming out, we think this quarter featured a lot of important positives. The stock traded up 13.1% to $112.98 immediately following the results.

Updated: January 29, 2026 at 10:00 PM EST

A common mistake we notice when investors are deciding whether to buy a stock or not is that they simply look at the latest earnings results. Business quality and valuation matter more, so we urge you to understand these dynamics as well.

We cheer for all companies serving everyday consumers, but in the case of Deckers, we’ll be cheering from the sidelines. To kick things off, its revenue growth was weak over the last five years, and analysts expect its demand to deteriorate over the next 12 months. And while its stellar ROIC suggests it has been a well-run company historically, the downside is its constant currency sales performance has disappointed. On top of that, its projected EPS for the next year is lacking.

Deckers’s P/E ratio based on the next 12 months is 14.6x. This valuation multiple is fair, but we don’t have much confidence in the company. There are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $111.40 on the company (compared to the current share price of $113.95).