Deckers Hits 52-Week High on Strong Growth Momentum - Analyst Blog

Shares of Deckers Outdoor Corp. (DECK) touched a 52-week high of $99.88 on Dec 12, 2014 before eventually closing at $96.98. The company's growth initiatives, including product innovation, cost containment, store expansion, focus on profitable markets along with consistent strength of its UGG brand, have facilitated the stock to stay afloat in this soft economic environment.

Deckers' primary strength is its earnings surprise history. The company has outperformed the Zacks Consensus Estimate for ten consecutive quarters, with an average beat of 30.9%, including 15.8% in the last concluded quarter. This designer and producer of footwear and accessories delivered second-quarter fiscal 2015 earnings of $1.17 per share that surpassed the Zacks Consensus Estimate of $1.01 and surged 23.2% year over year buoyed by strong demand for UGG, Teva, Sanuk and HOKA brands.

Additionally, sales trends remained sturdy across the Direct-to-Consumer division, while omni-channel initiatives boosted consumer experience. This facilitated net sales to soar 24.2% to $480.3 million, ahead of the Zacks Consensus Estimate of $457 million. Stellar e-Commerce performance also contributed to sales growth.

Going forward, the company plans to open smaller concept omni-channel outlets and expand a new tool “Retail Inventory Online” to help customers locate products before they visit its outlets.

Following an impressive quarter, management raised its sales and earnings guidance for the year. Deckers now projects total revenue growth of 15% for fiscal 2015, up from 14% estimated earlier and anticipates sales growth of 14% in UGG brand (12% growth previously projected). Management also forecasts a 15.8% rise in earnings per share for the fiscal year — up from the 14.5% jump predicted earlier — taking into account an estimated gross profit margin of approximately 49% and an operating margin of about 13%.

We see Deckers, carrying a Zacks Rank #2 (Buy), as a solid bet for investors. Apart from Deckers, L Brands, Inc. (LB), Advance Auto Parts Inc. (AAP) and The Cato Corporation (CATO) also hit 52-week highs of $84.24, $161.99 and $41.27, respectively, on Dec 12.