| Stock (Symbol) | Stock Price | |
Deckers Outdoor (DECK) |
$80 |
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| Data is as of | Expected to Report | Sector |
August 11, 2010 |
Oct 22 |
Retail & Restaurant |
| Sharek’s Take | ||
 Yesterday, Decker’s announced a partnership Tom Brady to be its spokesman for UGGs for men — shoes, outerwear and accessories. What does this do for Decker’s stock? First of all, its not going to be easy to get manly-men to wear a girl’s shoe. I’m here in Manhattan where the trends are set, and I never see guys with UGGs. In fact, The Daily News just did an online poll asking men if they would wear UGGS and 77% said Uh, no (I voted Not Sure). Its too early to tell how much Brady will help DECK, but Jim Cramer announced on CNBC yesterday he thought profits could go 10% higher than current estimates.DECK stock has been strong during the holiday sales season – so strong I had to update my data twice. I first updated my charts and earnings table for this quarter on 11/21 when the stock was $67, but went on vacation before writing my quarterly update. Today I had to remake my charts and tables as the stock is now $80 — 19% higher since the week of Thanksgiving began. |
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| One-Year Chart | ||
 Deckers is obviously extended, but retail is strong this holiday season and with the economy going higher DECK could continue to move up. |
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| Earnings Table | ||
 DECK’s profits rose 24% last quarter, revenue climbed 22%. UGG sales, 90% of Deckers’ business, rose 20%. International sales rose 48%.Deckers has been on a good roll or beating estimates. Annual Profit Estimates continue to push higher — this should continue as holiday sales could be strong. 2010 and 2011 estimates rose 5% and 4% respectively, 2012 estimates rose 14%. Profits are expected to rise only 11% next year, so if profits jump another 10% via the Brady affect then we could have 20% growth – which would support the new and improved P/E (more on this later too). DECK’s quarterly estimates always look poor, then the company beats the street. If we assume DECK will beat by a fair amount the next couple of quarters, 20-25% profit growth can be achieved. |
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| Fair Value | ||
 I think Brady affect will take DECK’s P/E from 20 to 25 — leaving 28% upside in 2011. I didn’t increase estimates for the Brady factor, had I we could be looking at $112 (40% upside). Much of DECK’s recent growth is due to the P/E rising, that’s not always going to happen. |
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| Ten-Year Chart | ||
 Deckers used to have a P/E of 25 (2007), then the economy fell and shoe sales underdelivered. I think the economy will continue higher in 2011, so a dramatic fall shouldn’t occur — but its obvious in the ten-year chart that DECK has already made a big move and maybe we shouldn’t double-down at this point. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
5 of 18 |
Deckers is currently ranked 5th in the 18 stock Growth Portfolio Power Rankings. Deckers is not in the Aggressive Growth Portfolio because I feel the big move has already been made. If Deckers is successful at selling UGGs to men, that could prove to be a great catalyst for the stock. At this point I can’t tell you how that affects profits, but I do think the catalyst of the Brady affect takes DECK’s P/E from 20 to 25. | |
Aggressive Growth Portfolio
N/A |
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