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Deckers' Unmissable Run on the Bourses Makes It a Hot Pick

Zacks Equity Research

Deckers Outdoor Corporation DECK clearly appears to be a preferred pick, given its sturdy efforts to remain on growth trajectory. Notably, the company’s focus on expanding brand assortments, introducing more innovative line of products, targeting consumers digitally through marketing and sturdy e-commerce along with optimizing omni-channel distribution bode well.

All these factors helped the company deliver robust second-quarter fiscal 2020 results, wherein it continued its positive earnings and sales surprise for the 11th straight time. Also, the company’s top and bottom line improved on a year-over-year basis. Markedly, better-than-expected results prompted management to lift fiscal 2020 view. The stock has gained 5.8% since the announcement of its quarterly results on Oct 24. (Read: Deckers Beats on Q2 Earnings, Raises FY20 Outlook)

In the past three months, shares of this Goleta, CA-based company have increased approximately 24%, significantly outperforming the industry’s growth of 16.5%.



Further, analysts are steadily growing bullish on the stock. This is apparent from the rise in earnings estimates. The Zacks Consensus Estimate of $9.07 for fiscal 2020 and $9.99 for fiscal 2021 has moved up by 4.3% and 3.5%, respectively, in the past 30 days.

All said, let’s take a closer look at the aspects driving this Zacks Rank #1 (Strong Buy) stock. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors Narrating Deckers’ Growth Story

Deckers’ is focusing on product and marketing strategies that are more skewed toward customers and in this respect, it has been implementing customer relationship management (CRM) software and concentrating on loyalty program. Moreover, the company is focusing on expanding its product categories according to the customer purchasing trends. In order to capture incremental sales and margins, the company is selling directly to wholesale customers.

The company is constantly developing its e-commerce portal to capture incremental sales. The company has made substantial investments to strengthen its online presence and improve shopping experience for its customers. It is focused on opening smaller concept omni-channel outlets and expanding programs such as Retail Inventory Online; Infinite UGG; Buy Online, Return In Store; and Click and Collect to enhance customers’ shopping experience.

Apart from these, the company is undertaking efforts to bolster its portfolio. It is making marketing investments to build brand awareness of HOKA ONE ONE and UGG Men’s and UGG Women’s non-core category. Impressive performance across HOKA ONE ONE, Teva and Koolaburra brands and strength witnessed in early shipments with respect to the UGG brands’ domestic operations aided the second-quarter results.

Impressive View

Deckers anticipates third-quarter net sales in the range of $885-$900 million. Net sales of $873.8 million were reported in the year-ago period.

For fiscal 2020, the company expects net sales in the band of $2.115-$2.140 billion, which indicates year-over-year growth of 5-6%. The company had earlier projected net sales between $2.100 billion and $2.125 billion. It anticipates flat to low single-digit sales growth at UGG brand. Management expects sales from HOKA ONE ONE brand to be up in the mid to high 40% range for the year. Sales at Koolaburra brand is expected to increase in the mid 50% range.

The company now expects adjusted earnings between $8.90 and $9.05 per share. The same was $8.84 per share in fiscal 2019. Management had previously estimated earnings in the range of $8.40-$8.60 per share.

3 Stocks to Watch

NIKE, Inc. NKE has a long-term earnings growth rate of 13.1% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Steven Madden, Ltd. SHOO has a long-term earnings growth rate of 6% and a Zacks Rank #2.

Canada Goose Holdings Inc. GOOS has a long-term earnings growth rate of 22% and a Zacks Rank #2.

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This pioneering tech ticker had soared to all-time highs and then subsided to a price that is irresistible. Now a pending acquisition could super-charge the company’s drive past competitors in the development of true Artificial Intelligence. The earlier you get in to this stock, the greater your potential gain.

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Canada Goose Holdings Inc. (GOOS) : Free Stock Analysis Report
 
NIKE, Inc. (NKE) : Free Stock Analysis Report
 
Steven Madden, Ltd. (SHOO) : Free Stock Analysis Report
 
Deckers Outdoor Corporation (DECK) : Free Stock Analysis Report
 
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