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Deckers Outdoor (DECK) has a very bullish Chaikin Power Gauge stock rating and has been a standout performer in a market that has been under pressure for the past four weeks. DECK is a leader in the very strong Apparel group and attracts buyers whenever the stock pulls back for two or three days. After making a high at 99.67 on September 19th, DECK pulled back only 3 points and closed Friday within a fraction of its 52 week high. Use any short-term pullbacks to buy this market- leading footwear manufacturer and retailer.
Deckers Outdoor designs and manufactures footwear and apparel for both the casual and athletic markets. It’s been a well-known fact that sales were dependent on their trendy UGG brand of casual footwear, but DECK has diversified its product lines to position itself for a renewed revenue push. Deckers has a multi-channel sales strategy which includes wholesale to department stores and specialty retailers, 125 company owned stores and a small but rapidly growing e-commerce effort.
The company has launched athletic and workout footwear with a recent emphasis on the dynamic yoga and exercise markets. This has reduced their dependence on the UGG line and has enabled DECK to report record revenues in their fiscal 2014 1st quarter. The company’s President and CEO, Angel R. Martinez has led the revitalization of Deckers Outdoor after successfully achieving similar results as President and CEO of Rockport and then EVP and Chief Marketing Officer of Reebok International.
When the company reported record sales and a smaller than expected loss for their 1st quarter, on July 24th, Wall Street analysts took notice and aggressively increased their earnings estimates for 2015/2016. They also raised their price targets for Deckers with the most bullish target coming from Jeffries’ analyst Randal J. Konik who put a target of $130 on DECK. Sterne Agee and Piper Jaffrey also raised their earnings estimates and price targets.
As we head into the seasonally strong 4th quarter for apparel and retailing stocks, analysts continue to raise their estimates for DECK. Current consensus EPS for fiscal 2015 is $4.75 vs. $4.11 in 2014. The consensus estimate for 2016 is $5.61, with Jeffries at a much higher $6.25 estimate. The SPDR S&P Retail ETF (XRT) recently made a new 52 week high before pulling back 4% in last week’s decline.
Deckers Outdoor has been leading the Retailing and Apparel groups higher and should continue to outperform the sector and the market. Deckers guided higher on July 24th and may do so again in October. That the company has surpassed Wall Street estimates for the past eight quarters suggests that the next earnings report due out in late October could trigger a new wave of buying that could propel DECK toward Wall Street price targets.
DECK has a very bullish Chaikin Power Gauge stock rating which is driven by strong earnings growth, positive earnings surprises, very strong price/volume activity and strong return on equity. With analysts increasingly bullish, insiders buying and the stock a standout performer in the very strong Apparel Group, Deckers Outdoor is a classic bull play in a market that may breakout to the upside after the November elections.
Plus:
Chaikin Power Gauge stock rating model
NASDAQ Chaikin Power Stock Indexes
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
