What a brutal six months it’s been for Deckers. The stock has dropped 51% and now trades at $103, rattling many shareholders. This might have investors contemplating their next move.
Following the drawdown, is now the time to buy DECK? Find out in our full research report, it’s free.
Why Does DECK Stock Spark Debate?
Established in 1973, Deckers (NYSE: DECK) is a footwear and apparel conglomerate with a portfolio of lifestyle and performance brands.
Two Positive Attributes:
1. Long-Term Revenue Growth Shows Strong Momentum
A company’s long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Luckily, Deckers’s sales grew at a solid 18.5% compounded annual growth rate over the last five years. Its growth surpassed the average consumer discretionary company and shows its offerings resonate with customers. 
2. New Investments Bear Fruit as ROIC Jumps
A company’s ROIC, or return on invested capital, shows how much operating profit it makes compared to the money it has raised (debt and equity).
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. Fortunately, Deckers’s ROIC has increased significantly over the last few years. 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 Reason to be Careful:
Projected Revenue Growth Is Slim
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect Deckers’s revenue to rise by 7.8%, a deceleration versus its 18.5% annualized growth for the past five years. This projection is underwhelming and indicates its products and services will see some demand headwinds. At least the company is tracking well in other measures of financial health.
Final Judgment
Deckers’s positive characteristics outweigh the negatives. With the recent decline, the stock trades at 16.6× forward P/E (or $103 per share). Is now a good time to buy? See for yourself in our full research report, it’s free.
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