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Deckers (DECK) Deserves a Place in Your Portfolio: Here's Why

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Deckers Outdoor Corporation DECK is targeting profitable and underpenetrated markets. The company is focused on product innovation, expanding brand assortments, enhancing omni-channel and e-commerce capabilities that bode well for the stock. These endeavors have led this Zacks Rank #2 (Buy) company to gain 78.6% in a year’s time compared with the industry’s 52.7% growth.

 

 

Deckers has been constantly developing its e-commerce portal to capture incremental sales. The company has made substantial investments to strengthen its online presence and improve shopping experience for its customers. The company is focused on opening smaller concept omni-channel outlets and expanding programs like Retail Inventory Online; Infinite UGG; Buy Online, Return In Store; and Click and Collect to enhance customers’ shopping experience. 

 

Further, the company is on track with its strategic endeavours to drive long-term growth. Its store-fleet optimization plan focuses on striking the right balance between digital and physical stores. Additionally, management expects cost savings of about $150 million backed by improvement in cost of goods sold and SG&A savings that include consolidation of retail outlets and process improvement efficiencies. This should help Deckers realize operating profit improvement of $100 million by fiscal 2020. Also, the company’s target of $2 billion sales with operating margin of 13% by fiscal 2020 highlight its long-term prospects.

 

Encouraging View

 

Deckers reported solid first-quarter fiscal 2019 results, and raised its earnings and net sales guidance for the year. Moreover, its top and bottom lines outperformed the Zacks Consensus Estimate for six straight quarters. Also, both the metrics improved on a year-over-year basis.

 

For 2019, management anticipates net sales to be $1,930-$1,955 million, up from its prior projection of $1,925-$1,950 million. Further, adjusted earnings are projected to be $6.25-$6.45 per share, which portrays an improvement from $5.74 reported in fiscal 2018. The company earlier envisioned adjusted earnings to be $6.20-$6.40 per share. Gross margin and operating margin for the fiscal year is anticipated to be better than the previous year.

 

Bottom Line

 

Certainly, Deckers’ sound fundamentals and upbeat guidance is likely to add momentum to the stock.

 

Check These Promising Picks

 

Rocky Brands, Inc. RCKY delivered an average positive earnings surprise of 56.3% in the trailing four quarters. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

 

Wolverine World Wide, Inc. WWW has a long-term earnings growth rate of 10% and a Zacks Rank #2.

 

Carter’s, Inc. CRI has a long-term earnings growth rate of 9.3% and a Zacks Rank #2.

 

Will You Make a Fortune on the Shift to Electric Cars? 

 

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

 

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.