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Deckers Outdoor Corp. Message Board

  • indian8788 indian8788 Nov 13, 2012 5:04 PM Flag

    Explain how papa johns

    is trading as a higher valued company with just 40% of dECK's profits? That is the beauty of the market, some stocks get ridiculously undervalued.

    Z

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    • DECK has had about a half billion dollars of shares SOLD (short) in the past year. Did papa johns? I doubt it. That may explain the difference in valuation? As someone has said before, the stock price is in a sense artificially suppressed. apparently the SEC allows this kind of thing and requires NO reporting, auditing, etc. Think about it: a company can "borrow" shares (i.e., sell non-existent shares) to the tune of a half billion dollars and completely destroy a stock, taking out stop loss orders along the way and the SEC allows this to happen anonymously and one can only wonder why. On the other hand, the SEC requres that every single share of stock i buy or sell or sell short is recorded, reported and now each and every transaction reported to the IRS. And, every LONG position held by companies has to be reported also via SEC reporting requirements.

    • I like Papa John's, but their company model is hardly conducive to making a ton of money.

      With the ever-increasing food costs on staple foods I would be hesitant to buy into this sort of business plan. It is going to react similar to Chipotle in some aspects, which took a major dive as a result of high input food costs and the lack of expansion predicted by analysts.

      My concern with the franchise-based approach is that revenues might be consistent but the growth metrics are tame. McDonald's started out running their own stores, but over time decided to modify their capital expense and shift to this sort of model. Look at McDonald's now after it took a hit on sales for the previous month.

      • 1 Reply to cwebjohn
      • Excellent counter cWEjohn, could not have said it better myself.

        I would just elaborate on papa johns margins. The food business is fickle and while papa johns revenues can grow "infinitely", its margins can't. Like CWEjohn stated, food products cost money and those costs change all the time. Secondly, apa johns is dependend much like DECKers on a decent economy where eople have some money in their pocket. So basically, the reason for my analogy is pretty simple; both companies face similar challenges.

        One could have said the same thing about COACH. Yet, look where COACH is now. It isn't like there aren;t knockoffs of COACH products, but COACH is THE BRAND.

        Deckers has to fix the inventory issue as well as the rpcie issue. I believe the rice issue will fix up the inventory issue pretty nicely at the expense of short term margin compression. This company can get inventory in line. They are clearly aware of the problem.

        Angel mentioned it on the call earlier this year stating this is the toughest year he has faced managing the company. He has plenty of money riding on his performance(stock and options) to provide incentive to fix the situation. A company forecasting 150M in the worst year its faced in 7 years, earning over 150M with the best earnings 199M a year ago, its not too bad. I'm not saying earnings going down 50M is something to cheer about. Clearly not good. But things are fixable. Just leave your house and you will notice these on womens feet. Even the copycat versions give us credit as a brand as it showcaes the styles popularity.

        Men's line is coming on and with the proer marketing, should grow pretty well. Plenty of good things ahead for this company.

        Z

    • It's all in the pizza toppings

 
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