Before when I had been evaluating this investment, I had referred to Deck's "key statistics" per Yahoo-Finance, and I felt relieved that, formally, we had no debt, positive revenue growth, positive earnings growth, and less short-shares, around 30%; Still we were earning over $4.00 eps, and now Barron's points-out that our new eps is around $3.37 for the full year!, per their latest magazine issue dated 11/12/2012
So, here is the new financial picture: 1)$1.07-Billion market-cap on $1.4 Billion revenue 2) Revenue-growth is down some 9%, while earnings-growth is down a whopping 30%....and 3) instead of no-debt (one of the big reasons I had bought this stock, we have $275-million in debt, most of it largely responsible for stock-buy-backs at much higher prices. The only good-caveat is that they aren't finished with the buy-back, but I would question other investors, do we have to borrow more money to finish the buy-back, or have all the funds already been secured? That's an important question to know, so I've got more dd to perform. 4) Our levered free-cash flow has turned negative, while our shares-outstanding have decreased to 28-million floating! 4) sort interest has shot-up to a whopping 46%, almost half the float is now short! Wow!
So, this is our "new reality", and I'd like some other, (more positive longs than I), tell the board here, how this new financial reality is positive, or at least, how the shares stand some chance for good appreciation ahead?
From a novice's perspective, all I can say positive is that "there are a bit less shares now", and I know the Ugg brands is still very strong! I think the next report will show a strong improvement, but still, I'm a bit dis-heartened with this "new financial picture". I'll let other thoughtful longs reply, and I hope someone has some positive comments that can buttress a nice appreciation in PPS from this $30-level!
But, after seeing this new financial-picture, I feel more and more strongly that if Angel could get ANYTHING AT $50 or above offer, that would be in the best interest for the Company and its shareholder right now, and going forward. I don't see how Uggs can maintain their current level of popularity in the years ahead, much less grow beyond the growth we've seen before. And heaven forbid when they fall out-of-style completely! Plus, I'm not convinced that Decker's is successful at branding itself as a "fine-leather-goods Co, appealing to both females and males". I think they have the potential to be that, but I don't trust their ability to be that by themselves necessarily! I do know that Coach-for-men has gained a lot of traction of late...but that's Coach and Coach management, and their more neuter-specific leather-goods market, outside of women's purses. I saw some great all-around leather goods at a store in Hong-Kong this past summer, and there's a lot more to Coach than "women's purses"...they are becoming an "all-around purveyor of great leather good, for women, men and the household"! Still, Coach can and does sell-all-year-'round, and except for Decker's summer brand of foot-wear, their mainstay product is a seasonal item only!
I do however think that Decker's has some pretty good looking men's boots, but I don't know how much traction they are gaining in this new market! Finally, I like the stand-alone stores...I think they are great! But being branding as "Uggs store", what are they going to sell in July and August? Might they better be branded as "Decker's stores", with an inner department called Uggs? I would think so!
PS: Held-up well today...and would appear to be great accumulation going-on at this level, although with such big-short-interest, "accumulation can often be for gathering shares to short more"! Still a "nervous nelly" myself, and would love to hear detailed reasoning, financial parsing, from Jeffries to arrive at a $50-target price!
Good luck to all longs, and thoughtful replies encouraged and appreciated!
AmericanChariot, a lot of investors seem to be forgetting that sheepskin prices were up 40% in 2011 and Deckers was locked in at those prices for this year. That takes a big chucnk out of the earnings. Earnings were down 30% compared to the 40% rise in sheepskin costs. So seems to be a short term hit. Sheeskin costs were siad to be heading lower according to deckers in the last two earnings, but we won't be seeing that effect on earnings unitl next year.
I would also mention that its not a shocker that we are now in debt. The balance sheet is decieving in the sense that we are a company earning well over 100M and took on 200M in debt to cover a buyback at 3 year lows. It's not bad debt considering we are buying what we believe to be an undervalued assett.
28M shares outstadning is even less shares than I thought were available. This company is defintly facing issues, I don't deny it. The market is severely depressing the rice for those reasons, betting the company can;t fix the roblems. Those who thinkn otherwise like myself are getting a "great deal" due to those issues and the fact that the other side(46% short) is betting so hard for this company/brands downfall.
All in the eye of the beholder. If a company like barnes and noble can be valued at anythhing more than 50M in this market(its being valued at 500-700M), then DECKERS for its profits should be trading at least double this stock price.
"If a company like barnes and noble can be valued at anythhing more than 50M in this market(its being valued at 500-700M), then DECKERS for its profits should be trading at least double this stock price."
wow, another whizbang analysis from Indian, and for free too! with analysis like this, you just buy now and grab all the money later. thanks indian. thanks for your time.
you are asking for advice on a yahoo board? perhaps indian can help you out. he's as sharp as a tack and knows what angel thinks and what deck is up to. outside of cramer himself, you won't find another more knowedgable market guru than indian. he is right up there with buffet, einhorn, cramer and indian..
OR, you can go read the analysis by Jeffries, just put out a week ago during their upgrade. i bet that guy knows ALMOST as much as indian and might be more trustworthy than some of the other analysts who cover deck.