As you might know, Deckers Outdoor Corporation (NYSE:DECK) just kicked off its latest quarterly results with some very strong numbers. It was a solid earnings report, with revenues and statutory earnings per share (EPS) both coming in strong. Revenues were 12% higher than the analysts had forecast, at US$624m, while EPS were US$3.58 beating analyst models by 33%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the current consensus from Deckers Outdoor's 13 analysts is for revenues of US$2.28b in 2021, which would reflect a reasonable 2.6% increase on its sales over the past 12 months. Statutory earnings per share are expected to shrink 2.5% to US$10.84 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$2.18b and earnings per share (EPS) of US$9.88 in 2021. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 14% to US$298per share. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Deckers Outdoor at US$310 per share, while the most bearish prices it at US$240. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Deckers Outdoor is an easy business to forecast or the the analysts are all using similar assumptions.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Deckers Outdoor's revenue growth will slow down substantially, with revenues next year expected to grow 2.6%, compared to a historical growth rate of 4.1% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 10% per year. Factoring in the forecast slowdown in growth, it seems obvious that Deckers Outdoor is also expected to grow slower than other industry participants.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Deckers Outdoor's earnings potential next year. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Deckers Outdoor analysts - going out to 2025, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Deckers Outdoor that you should be aware of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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