Why I see earnings reaction to the upside or downside a win-win
If earnings come out great, we get the pop. Hopefully management bought back some shares with the 79M left or used it all up. A reiteration of the 1.5B forecast in revenues would be nice to hear in the face of oil increasing more than 10% since the piper Jaffrey conference.
If the stock tanks after earnings, one gets the oppurtunity to buy more shares of a great company. I have a hard time imagining management not defending the stock price going foward at these levels with MORE potential buybacks.
The first buyback was initiated at 72/share and the second one was initiated around this level, the more aggressive 200M with borrowed money.
Balance sheet is pristine. Deckers still has access to a 300M credit facility which was used a year ago for the second buyback of 200M. Cash is on its way in the next 6 months with our busy part of the year coming up.
If the stock were to somehow collapse back to the 40's, I do not see how management would not just continue to grab the oppurtunity presented by the market to continue to buy itself back aggressively.
This is the strength of this company and a sign of its health and a sign of why it is in fact trading so cheaply.
It would not even have to be another 200M dollars worth. Another 100M would be just fine. No need to bet the house. But if management was able to take the initiative and buy back 300M of itself in the midst of sheepskin costs rising YOY and not knowing when it would stop....now that we know that sheepskin has stabilized and the company is growing its store count by 140% and thereby likely becoming much stronger and in a much better place, it would be hard to believe no action would be taken. Plus the integration of UGG pure giving some cushion.