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Deckers Hits a New 52-Week High

Zacks Equity Research

Shares of Deckers Outdoor Corporation (DECK) hit a new 52-week high of $88.77 on Jan 6, before closing at $87.99. Shares of this Zacks Rank #2 (Buy) stock rose more than twofold in the past one year.

Based on the current price, this department store retailer is 2.8% below the Zacks Consensus average analyst price target of $90.56. The company currently trades at a forward P/E of 18.52x, a discount of 3.5% to the peer group average of 19.19x. Additionally, the company’s long-term estimated EPS growth rate is 17.5%.

The challenging macroeconomic environment compelled Deckers to resort to various means of repositioning itself and keep afloat. Such measures include focusing on new product introductions, effective cost management and new store openings. We believe expanding direct-to-consumer operations, omnichannel strategies, effective inventory management and optimum capital allocation augur well for Deckers to sustain its growth momentum.

This is well reflected through Deckers’ better-than-expected third-quarter 2013 bottom-line results. The company posted quarterly earnings of 95 cents a share that surpassed the Zacks Consensus Estimate of 72 cents. Total net sales rose 2.7% year over year to $386.7 million and came almost in line with the Zacks Consensus Estimate.

Management continues to project total revenue growth of 8% for 2013, while it envisions a 10% rise in earnings per share, up from 8% predicted earlier.

The earnings surprise history of the company also sparks optimism about its future upbeat performance. Deckers has outperformed the Zacks Consensus Estimate in the last four quarters by an average of 48.1%.

Deckers is also expanding its footprint by targeting profitable markets. This is well evident from the company’s retail store sales that rose 34.5%. Management is eyeing opportunities for store expansion in Asia, mainly Japan and China, and seeks to enhance the company’s presence in South Korea, Taiwan, Mongolia, Singapore and Australia.

Apart from Deckers, other stocks such as The Walt Disney Company (DIS), Foot Locker, Inc. (FL) and ANN INC. (ANN) achieved new 52-week highs of $76.84, $41.73 and $39.13, respectively, yesterday.

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