Bull of the Day: Deckers Outdoor (DECK)

Deckers Outdoor (DECK), a Zacks Rank #1 (Strong Buy), is a footwear and apparel company recognized for its premium lifestyle and performance brands. The company designs, manufactures, and sells shoes, sandals, and boots, emphasizing comfort and innovation.The stock has taken a major hit since reporting earnings in late January. Down over 30% from the recent highs, the stock is coming into a big support level that investors should be eyeing.About the CompanyDeckers is valued at $23 billion and employs close to 5,000 people.The company, founded in 1973 and headquartered in Goleta, California, operates a diverse portfolio of footwear and apparel brands catering to both casual and high-performance consumers.In addition to its well-known UGG, HOKA, and Teva brands, the company also offers relaxed casual footwear through Sanuk, fashion-focused casual shoes under Koolaburra, and previously marketed footwear under the AHNU brand.Deckers distributes its products globally through a mix of domestic and international retailers, distributors, and its direct-to-consumer channels, which include e-commerce platforms and company-owned retail stores.The stock has a Zacks Style Score of “A” in Growth, but “D” in Value and Momentum. Q3 Earnings BeatDeckers delivered a strong Q3, beating EPS by 15% and revenue estimates. The company raised full-year guidance across the board, projecting FY25 EPS between $5.75-$5.80 (above the $5.62 consensus) and improving its gross margin outlook to 57% or better.UGG continued to be a standout performer, generating $1.24 billion in revenue (+16.1% YoY), with exceptional holiday sales, strong international demand, and impressive full-price sell-through.HOKA also posted another quarter of rapid expansion, with sales up 23.7% YoY, reinforcing its position as a high-growth performance brand.Management reiterated its commitment to disciplined brand management, avoiding excessive promotions to sustain long-term profitability.Despite the strong report, the stock traded lower due to revenue guidance falling slightly short of estimates ($4.90B vs. $4.93B expected), potential future margin pressure from inflation and FX headwinds, and some weakness in Teva (-6% YoY).Additionally, inventory levels increased to $577 million from $539 million a year ago, which could raise concerns about demand normalization.Estimates Headed HigherAnalysts have lowered their earnings estimates for the upcoming quarter, but continue to raise estimates longer-term.  For the current quarter, earnings estimates went from $0.71 to $0.56 after the earnings report. This is a drop of 21% and a major reason why the stock was sold.However, for the current year estimates have improved 6%, going from $5.56 to $5.89.For the next year, analysts now see $6.60, which is up 7% from the $6.14 expected 90 days ago.  Deckers Outdoor Corporation Price and Consensus Deckers Outdoor Corporation price-consensus-chart | Deckers Outdoor Corporation QuoteWhile Deckers remains on track for its fifth consecutive year of mid-teens revenue growth, the market may be reacting to some short-term headwinds.  However, with its premium brand positioning, strong direct-to-consumer momentum, and disciplined pricing strategy, Deckers appears well-positioned for continued long-term success.The Technical TakeThe stock reached a high of $224 just before earnings but has since dropped 33%, recently trading around $150. It has now returned to a price range where it moved sideways for much of 2024, with the $140-$160 zone acting as former resistance that could now serve as strong long-term support—making it an attractive entry point for new investors looking to buy the dip.With the 200-day moving average sitting at $170, a relief bounce could test that level in the near term. However, if the stock falls below $135, it may signal deeper underlying issues that could lead to further downside.In SummaryDeckers Outdoor has faced a sharp pullback despite delivering strong Q3 results and raising full-year guidance. While near-term concerns around revenue guidance, margin pressures, and inventory buildup have weighed on the stock, the company remains well-positioned for long-term growth.With UGG and HOKA driving strong sales and analysts raising longer-term earnings estimates, the recent selloff could present a compelling buying opportunity at key technical support levels.Investors with a long-term perspective may find the current dip an attractive entry point into a high-quality, growth-focused footwear leader.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.3% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Deckers Outdoor Corporation (DECK): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks