Deckers (DECK)

Footwear and apparel conglomerate Deckers (NYSE:DECK) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 9.1% year on year to $1.43 billion. On the other hand, the company’s full-year revenue guidance of $5.35 billion at the midpoint came in 2% below analysts’ estimates. Its GAAP profit of $1.82 per share was 15.2% 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 sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Thankfully, Deckers’s 18.8% annualized revenue growth over the last five years was solid. Its growth beat the average consumer discretionary company and shows its offerings resonate with customers, a helpful starting point for our analysis.

Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. Deckers’s annualized revenue growth of 15.9% over the last two years is below its five-year trend, but we still think the results were respectable.

We can dig further into 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 16% 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 9.1%, and its $1.43 billion of revenue exceeded Wall Street’s estimates by 0.8%.

Looking ahead, sell-side analysts expect revenue to grow 7.5% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and implies its products and services will see some demand headwinds. At least the company is tracking well in other measures of financial health.

Deckers’s operating margin might fluctuated slightly over the last 12 months but has remained more or less the same, averaging 23.4% over the last two years. This profitability was elite for a consumer discretionary business thanks to its efficient cost structure and economies of scale.

In Q3, Deckers generated an operating margin profit margin of 22.8%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Deckers’s EPS grew at an astounding 29.8% compounded annual growth rate over the last five years, higher than its 18.8% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

In Q3, Deckers reported EPS of $1.82, up from $1.59 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 $6.75 to shrink by 3.9%.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Deckers has shown robust cash profitability, giving it an edge over its competitors and the ability to reinvest or return capital to investors. The company’s free cash flow margin averaged 21.8% over the last two years, quite impressive 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? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Deckers’s five-year average ROIC was 72.2%, placing it among the best consumer discretionary companies. This illustrates its management team’s ability to invest in highly profitable ventures and produce tangible results for shareholders.

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 great sign when paired with its already strong returns. It could suggest its competitive advantage or profitable growth opportunities are expanding.

One of the best ways to mitigate bankruptcy risk is to hold more cash than debt.

Deckers is a profitable, well-capitalized company with $1.41 billion of cash and $350.7 million of debt on its balance sheet. This $1.06 billion net cash position is 8.2% of its market cap and gives it the freedom to borrow money, return capital to shareholders, or invest in growth initiatives. Leverage is not an issue here.

It was good to see Deckers beat analysts’ EPS expectations this quarter. We were also happy its constant currency revenue narrowly outperformed Wall Street’s estimates. On the other hand, its full-year revenue guidance missed. Overall, this quarter could have been better. The stock traded down 8% to $94.30 immediately following the results.

Updated: December 4, 2025 at 9:58 PM EST

When considering an investment in Deckers, investors should account for its valuation and business qualities as well as what’s happened in the latest quarter.

Deckers falls short of our quality standards. First 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 Forecasted free cash flow margin suggests the company will ramp up its investments next year. On top of that, its constant currency sales performance has disappointed.

Deckers’s P/E ratio based on the next 12 months is 15x. While this valuation is fair, the upside isn’t great compared to the potential downside. There are better investments elsewhere.

Wall Street analysts have a consensus one-year price target of $111.97 on the company (compared to the current share price of $96.30).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.