Earnings Preview: Deckers Outdoor

UGG boots maker Deckers Outdoor

is scheduled to report fourth-quarter 2011 results tomorrow, February 23, after the closing bell. The share price fell sharply in November and December, in part due to concerns about the impact of a warmer-than-expected winter on sales and the effect on margins of rising sheepskin costs. So investors will be looking for some good news in this report. Analysts on average predict that the company will post per-share earnings that are 27.5% higher than a year ago to $3.13 for the quarter, and that revenue totaled $564.6 million. That would be a year-over-year revenue increase of 31.3%. That EPS estimate is the same as 60 days ago. But note that analysts have underestimated per-share earnings results in the past ten quarters -- by 14.5% in the previous quarter. Looking back to the third quarter, Deckers Outdoor said its profit rose 48.3% year over year to $62.5 million, or $1.59 a share. And revenue rose 49.1% to $414.4 million, which beat consensus estimates. The company attributed the record quarterly results in part to international sales that more than doubled, driven by the growth in the United Kingdom and the Benelux countries. For the full year, the consensus estimate calls for $5.03 per share earnings on revenue of $1.3 billion. That compares to $4.03 per share and $1.0 billion last year. That EPS estimate is also the same as it was 60 days ago.

Deckers Outdoors designs, manufactures and markets footwear and accessories for outdoor activities in the U.S., Europe, Canada, Australia, Asia and Latin America. Its brands include UGG boots, Teva sandals and Simple sneakers. The company is headquartered in Goleta, Calif. It was founded in 1973, and it now has a market cap of $3.4 billion. Competitors include Crocs

, Nike

, Wolverine World Wide

and Skechers

. Skechers recently reported a net loss and Wolverine a decline in earnings for their respective fourth quarters. Crocs is also scheduled to post results Thursday, and double-digit revenue growth is predicted.

During the three months that ended in December, Deckers Outdoors saw strong Black Friday sales of UGG boots. It relaunched its Teva brand in Japan, and it collaborated with designer Timo Weiland on a collection of women's footwear for spring 2012. The stock hit a multiyear high in November.

The forward earnings multiple is less than the industry average P/E ratio, and the PEG ratio is less than the industry average too. The operating margin is better than the industry average. The long-term EPS growth forecast is 19.5% and the return on equity is 25.6%. But short interest is 14.2% of the float. Of 16 analysts polled who follow the stock, however, 13 rate it Buy or Strong Buy. Their mean price target on the shares is more than 22% higher than the current share price. Shares have traded mostly between $80 and $90 since mid December, with the 200-day moving average acting as resistance. But the share price jumped 6.6% in the past week to near the top of that range, though it is still down less than 2% from where it was a year ago. The 52-week range is $72.78 and $118.90. Over the past six months, the stock's performance has been in line with the broader markets and Wolverine World Wide, but it has outperformed Crocs and Skechers.