Deckers Outdoor Corp (DECK, Financial) has recently shown a notable daily gain of 14.18% and a three-month gain of 17.31%, alongside an impressive Earnings Per Share (EPS) of 29.29. With these figures in mind, the critical question arises: is the stock significantly overvalued? This article aims to explore Deckers Outdoor's valuation in depth, providing investors with insights necessary for informed decision-making.
Company Overview
Deckers Outdoor designs and markets footwear, apparel, and accessories, with primary brands including UGG, Teva, and Sanuk. The company boasts a substantial wholesale business and a significant direct-to-consumer presence through retail stores and websites, primarily in the U.S., but also globally. With a market cap of $26.30 billion and a stock price of $1032.9, compared to a GF Value of $599.52, there appears to be a significant discrepancy between the current market price and the estimated fair value.
Understanding GF Value
The GF Value is a proprietary measure calculated based on historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. This metric suggests a fair trading value, providing a benchmark against which the current stock price can be evaluated. For Deckers Outdoor, the GF Value indicates that the stock is significantly overvalued, suggesting potential poor future returns if the price remains well above this intrinsic benchmark.
Financial Strength and Profitability
Investing in companies with robust financial strength reduces the risk of permanent capital loss. Deckers Outdoor's financial strength is commendable, with a cash-to-debt ratio of 6.03, ranking better than 82.52% of peers in the industry. This strong financial position is supported by a consistent profitability track record, with an operating margin of 21.58%, ranking higher than 94.92% of competitors.
Growth and Value Creation
Deckers Outdoor's growth metrics are also impressive, with a 3-year average revenue growth rate outperforming 84.39% of companies in the same sector. Additionally, the company's Return on Invested Capital (ROIC) of 64.52 significantly exceeds its Weighted Average Cost of Capital (WACC) of 11.26, indicating efficient value creation for shareholders.
Conclusion
Despite Deckers Outdoor's strong financial health, growth, and profitability, the current market price significantly exceeds its GF Value, suggesting that the stock is overvalued. Investors should consider this valuation discrepancy before making investment decisions. For more detailed financial analysis and data, visit Deckers Outdoor's 30-Year Financials.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
