Deckers Upbeat on Fiscal 2015: Is DECK in Your Portfolio? - Analyst Blog

Is Deckers Outdoor Corporation (DECK) part of your portfolio? If not, then this is the right time to build positions in the stock as it is looks promising and has underlying factors capable of carrying momentum further.

The stock attained a Zacks Rank #1 (Strong Buy) yesterday and has surged roughly 16% year to date, demonstrating its inherent strength and long-term earnings growth projection of 14%. We see it as a solid bet for investors.

Deckers' primary strength is its earnings surprise history. The company outperformed the Zacks Consensus Estimate in 9 consecutive quarters, with an average beat of 32.5%. In the last concluded quarter, this designer and producer of footwear and accessories outdid the Zacks Consensus Estimate by 18.3%. The company's better-than-expected first-quarter fiscal 2015 results provided much impetus to the stock that has surged 14% since the announcement on Jul 24.

The company incurred a loss of $1.07 per share that was narrower than the Zacks Consensus Estimate of a loss of $1.31. Moreover, net sales surged 24.3% year over year to $211.5 million and came ahead of the Zacks Consensus Estimate of $191 million.

Top-line growth was fueled by robust demand for its brands, stellar e-Commerce growth and the company's omni-channel capability. Going forward, Deckers plans to open smaller concept omni-channel outlets and expand a new tool “Retail Inventory Online” to help customers locate products before they visit outlets.

Following the impressive quarter, management raised its sales and earnings guidance for the year. Deckers now projects total revenue growth of 14% for fiscal 2015, up from 13% forecast earlier. Also, management now envisions a 14.5% rise in earnings per share for the fiscal year up from the 13.5% jump expected earlier.   

The company is also optimistic about its future performance, given its continuous investments in brand development, its omni-channel capacities and consistent strength in its UGG brand. Apart from this, the company has been undertaking initiatives to improve the supply chain in order to curtail costs and enhance efficiency.

Estimates for Deckers have been portraying an uptrend since first quarter results. It seems that analysts have become constructive on the stock's future performance. This is evident from the movement witnessed in the Zacks Consensus Estimate that increased 1.7% to $4.74 for fiscal 2015 and 4.9% to $5.61 for fiscal 2016 in the past 60 days.

Other Favorably Ranked Stocks

Other stocks worth considering in the retail sector include Carter's, Inc. (CRI) and Skechers USA Inc. (SKX) both sporting a Zacks Rank #1, as well as Brown Shoe Co. Inc. (BWS) carrying a Zacks Rank #2 (Buy).