Deckers Outdoor Corp. - Momentum

Deckers Outdoor Corp. (DECK) recently rebounded from a key trend line to move within striking distance of the all-time high after reporting an awesome 130% Q2 earnings surprise in late July. Estimates have since jumped higher, helping create a unique combination of momentum and value.

Company Description

Deckers Outdoor Corp. designs and sells footwear and accessories for outdoor and casual uses worldwide. The company was founded in 1973 and has a market cap of $1.94 billion.

We recently received an update on Decker's business when the company reported better than expected Q2 results on July 22 that included an awesome 130% earnings surprise.

Second-Quarter Results

Revenue for the period was up 34% from last year to $137 million. Earnings also came in strong at 23 cents, 130% ahead of the Zacks Consensus Estimate calling for 10 cents. The company's average earnings surprise over the last four quarters now stands at 55%.

Decker's saw strong results in its two key brands, with its very popular UGG brand sales up 35% from last year to $100 million. Its other high-profile brand Teva was up 38% to $31 million. International sales were also strong, up 55% to $72 million.

The company's strong top-line growth was accompanied by effective cost management, where gross margin expanded to 44% from 40% last year.

Balance Sheet

Deckers also enjoys the flexibility of a pristine balance sheet, with its cash and equivalents up $225 million from last year to $334 million against no debt.

Estimates

Estimates took a little jump higher on the good quarter, with the current year up 19 cents to $3.53 and the next year adding 25 cents to $3.95, a solid 12% growth projection.

Valuation

But in spite of the recent gains, DECK still looks reasonably priced, trading with a forward P/E multiple of 14X against its peers 13X.

2-Year Chart

DECK recently rebounded from a key trend line to move back within striking distance of the all-time high at $51.80. Look for support from the trend line and the short-term low on any weakness, take a look below.

Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.
 
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