Deckers (DECK) Soars to 52-Week High, Time to Cash Out?
Shares of Deckers Outdoor (DECK) have been strong performers lately, with the stock up 22.2% over the past month. The stock hit a new 52-week high of $267.1 in the previous session. Deckers Outdoor has gained 49.8% since the start of the year compared to the -2.2% move for the Zacks Consumer Discretionary sector and the 21.4% return for the Zacks Shoes and Retail Apparel industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on July 30, 2020, Deckers reported EPS of $-0.28 versus consensus estimate of $-1.11 while it beat the consensus revenue estimate by 7.05%.
For the current fiscal year, Deckers is expected to post earnings of $9.36 per share on $2.16 billion in revenues. This represents a -2.7% change in EPS on a 1.08% change in revenues. For the next fiscal year, the company is expected to earn $11.27 per share on $2.43 billion in revenues. This represents a year-over-year change of 20.42% and 12.74%, respectively.
Deckers may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Deckers has a Value Score of D. The stock's Growth and Momentum Scores are B and A, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 27X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 22.5X versus its peer group's average of 9.4X. Additionally, the stock has a PEG ratio of 1.6. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Deckers currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Deckers meets the list of requirements. Thus, it seems as though Deckers shares could have potential in the weeks and months to come.
How Does Deckers Stack Up to the Competition?
Shares of Deckers have been moving higher, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also looking good, including Caleres (CAL), Wolverine World Wide (WWW), and Kontoor Brands (KTB), all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 8% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Deckers, even beyond its own solid fundamental situation.
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Deckers Outdoor Corporation (DECK): Free Stock Analysis Report
Wolverine World Wide, Inc. (WWW): Free Stock Analysis Report
Caleres, Inc. (CAL): Free Stock Analysis Report
Kontoor Brands, Inc. (KTB): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.