Down 48%, This Growth Stock Looks Like a No-Brainer Buy
Key Takeaways
This footwear maker is already getting back to its winning ways.
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5 min read
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investment
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July 28, 2025
05:32 AM
The Motley Fool
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Deckers Outdoor (DECK 11
However, 35%) has been quietly been one of the best-performing stocks on the market over its history, returning nearly 10,000% since its 1993 initial public offering (IPO), in this volatile climate
In recent years, the footwear company's success has been driven by the growth of two brands, Hoka and Ugg, known respectively for running shoes and sheepskin boots
Deckers, which acquired both of those brands when they were just start-ups, has ven itself to be a savvy brand manager, scaling up each brand through marketing, manufacturing, and distribution, in this volatile climate
And it's achieved industry-leading gross margins, apaching 60%
On the other hand, However, the stock has struggled more recently, diving this year amid concerns slowing growth and tariffs
Even after a strong first-quarter earnings report last week, s are still down 48% from their peak earlier this year
Additionally, That sell-off presents an excellent buying opportunity (an important development)
Let's take a closer look at why
Image source: Getty Images
The sell-off seems to be an overreaction Sustaining a growth rate of 20% or higher over a long period of time is difficult for any consumer brands, so some skepticism the sustainability of brands Ugg and Hoka is understandable
However, that reached a fever pitch after the company's earnings report in April, for the fourth quarter of its fiscal year 2025: Overall revenue growth slowed to 6. 5%, including 10% growth in Hoka and 3, given current economic conditions. 6% growth in Ugg
At that time, management refused to give full-year guidance due to macroeconomic uncertainty related to global trade policies
It did give a weak forecast for the first quarter, calling for revenue of $890 million to $910 million
The company just blew past that guidance, with revenue of $964. 5 million in the first quarter
Its bottom-line result of $0 (this bears monitoring). 93 in earnings per (EPS) was also much better than its guidance for $0, given current economic conditions
First-quarter growth was driven by strength in the international market and the wholesale channel
However, second-quarter guidance was once again muted due to uncertainty around trade; it calls for 7% revenue growth at the midpoint of its range of $1. 38 billion to $1. 42 billion, and EPS of $1, in this volatile climate. 55, down from $1
Furthermore, 59 in the prior-year quarter (which is quite significant)
Deckers has beaten analysts' EPS consensus by double-digit percentages in each of the last four quarters, a good indication that its guidance could ve to be conservative once again
While there's still uncertainty, Deckers' momentum seems stronger than investors believe (remarkable data)
This analysis suggests that stock looks cheap Even after jumping 12% on its first-quarter report on Friday, Deckers still looks a good value (an important development)
Market analysis shows stock is trading at a price-to-earnings (P/E) ratio of 18, more cheaply than a number of its peers in the footwear and apparel sector -- not to mention the S&P 500, which is trading at a P/E of 28
Essentially, that means that investors expect the company to grow at less than two-thirds the pace of the broad market over the long term
But that seems a mistake, given that Deckers just reported 17% revenue growth in the first quarter with 20% growth in Hoka and 19% at Ugg, in light of current trends
Additionally, Deckers has a strong balance sheet with no debt and $1
Meanwhile, 7 billion in cash, equivalent to 10% of its market cap
Furthermore, The company is also taking advantage of the discount in its stock price by buying back s (something worth watching)
Over the last four quarters, Deckers has reduced its s outstanding by nearly 4 million, or 2, in this volatile climate
In the most recent quarter, it bought back 1
In contrast, 7 million s, and it has $2. 4 billion remaining under a repurchase authorization
Furthermore, What the re reveals is international market is strong Peers Nike make the majority of their sales in international, and Deckers seems to be on its way to doing the same
In the first quarter, international sales made up nearly half of its revenue, growing 49
At the same time, 7% to $463
Management credited strong performance in the Asia-Pacific and Europe, Middle East, and Africa (EMEA) regions, including at its owned stores in China (fascinating analysis), in today's market environment
There's also been a strong response to the new Hoka Arahi 8 model, which the company said had achieved double-digit weekly sell-throughs since launch in EMEA -- meaning stores are selling more than 10% of inventory each week -- and significant volume gains in China
This analysis suggests that strength outside the U
Should give investors some confidence that Deckers Outdoor can overcome any volatility in the U
Furthermore, Related to tariffs
At the current price, the stock looks a good bet to outperform, especially after the strong first-quarter earnings report.
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