Deckers (DECK)

Footwear and apparel conglomerate Deckers (NYSE:DECK) reported Q4 CY2024 results beating Wall Street’s revenue expectations, with sales up 17.1% year on year to $1.83 billion. On the other hand, the company’s full-year revenue guidance of $4.9 billion at the midpoint came in 0.7% below analysts’ estimates. Its GAAP profit of $3 per share was 14.9% 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. While any business can experience short-term success, top-performing ones enjoy sustained growth for years. Luckily, Deckers’s sales grew at a solid 18% compounded annual growth rate over the last five years. 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 17.4% over the last two years aligns with its five-year trend, suggesting its demand was stable.

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 17.7% year-on-year growth. Because this number aligns with its normal revenue growth, we can see Deckers’s foreign exchange rates have been steady.

This quarter, Deckers reported year-on-year revenue growth of 17.1%, and its $1.83 billion of revenue exceeded Wall Street’s estimates by 5.5%.

Looking ahead, sell-side analysts expect revenue to grow 8.7% 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 has been trending up over the last 12 months and averaged 22.7% over the last two years. On top of that, its profitability was elite for a consumer discretionary business, showing it’s a well-oiled machine with an efficient cost structure that benefits from operating leverage as it scales.

In Q4, Deckers generated an operating profit margin of 31%, 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 astounding 29.9% compounded annual growth rate over the last five years, higher than its 18% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

In Q4, Deckers reported EPS at $3, up from $2.52 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 $6.17 to grow 3.5%.

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 impressive cash profitability, giving it the option to reinvest or return capital to investors. The company’s free cash flow margin averaged 13.2% over the last two years, better than the broader consumer discretionary sector.

Growth gives us insight into a company’s long-term potential, but how capital-efficient was that growth? 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 66.6%, 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 typically prefer to invest in companies with high returns because it means they have viable business models, but the trend in a company’s ROIC is often what 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 $2.24 billion of cash and $257 million of debt on its balance sheet. This $1.98 billion net cash position is 5.9% 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.

We were impressed by how significantly Deckers blew past analysts’ constant currency revenue and EPS estimates this quarter. On the other hand, its full-year revenue guidance slightly missed even though the company raised it. Overall, this "beat and raise" quarter had some key positives, but the market was expecting even better results (implied by its 39x forward P/E ratio before the earnings release, which is high for a consumer company). The stock traded down 15.9% to $187.34 immediately following the print.

Updated: May 16, 2025 at 11:00 PM EDT

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 possesses a number of positive attributes. To kick things off, its revenue growth was solid over the last five years. And while its projected EPS for the next year is lacking, its stellar ROIC suggests it has been a well-run company historically. On top of that, its Forecasted free cash flow margin suggests the company will have more capital to invest or return to shareholders next year.

Deckers’s P/E ratio based on the next 12 months is 20.1x. Looking at the consumer discretionary landscape right now, Deckers trades at a pretty interesting price. If you’re a fan of the business and management team, now is a good time to scoop up some shares.

Wall Street analysts have a consensus one-year price target of $164.33 on the company (compared to the current share price of $126.30), implying they see 30.1% upside in buying Deckers in the short term.

Want to invest in a High Quality big tech company? We’d point you in the direction of Microsoft and Google, which have durable competitive moats and strong fundamentals, factors that are large determinants of long-term market outperformance.

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