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Deckers (DECK) Losing Favor of Analysts: Time to Sell?

Zacks Equity Research

We had learnt in school that “An ounce of prevention is worth a pound of cure.” The saying simply means that a timely action can prevent some serious loss later on. How about applying the same principle to your portfolio? Exiting an out of favored stock at the right time helps maximize your portfolio’s returns. Deckers Outdoor Corp. DECK is one stock which is no longer in analysts’ good book. Let’s find out why.

Despite reporting better-than-expected financial numbers for the fourth quarter of fiscal 2016, Deckers provided a lackluster outlook for the first quarter and full-year fiscal 2017. For fiscal 2017, the company projects net sales to be flat to down 3%. For the first quarter of fiscal 2017, Deckers estimates a 20–25% decline in revenues. Management also expects loss of approximately $2.10–$2.20 per share for the quarter. In the first quarter of fiscal 2016, the company had reported loss per share of $1.43.

Let’s look at the Zacks Rank #4 (Sell) company earnings estimate revisions in order to get a clear picture of analysts’ opinion about the stock. In the past 60 days, Deckers’ earnings estimates for fiscal 2017 and fiscal 2018 declined by 34 cents and 10 cents to $4.16 and $4.62, respectively. On the other hand, loss estimates for the first quarter of fiscal 2017 have widened by 53 cents to a loss of $2.04, over the same time frame.

DECKERS OUTDOOR Price and Consensus

DECKERS OUTDOOR Price and Consensus | DECKERS OUTDOOR Quote

Further, high exposure to international markets makes Deckers prone to currency fluctuations. The weakening of foreign currencies against the U.S. dollar may require the company to either raise prices or contract profit margins in locations outside of the U.S. However, an increase in price may have an adverse impact on the demand for its products.

Stocks to Consider

Some better-ranked stocks in the retail sector that warrant a look include Carter's, Inc. CRI, The Children's Place, Inc. PLCE and Destination XL Group, Inc. DXLG. All these stocks hold a Zacks Rank #2 (Buy).

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DECKERS OUTDOOR (DECK): Free Stock Analysis Report
 
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