Deckers Outdoor Corporation (NYSE:DECK): Has Recent Earnings Growth Beaten Long-Term Trend?
Measuring Deckers Outdoor Corporation's (NYSE:DECK) track record of past performance is a useful exercise for investors. It enables us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess DECK's recent performance announced on 31 December 2019 and weigh these figures against its long-term trend and industry movements.
See our latest analysis for Deckers Outdoor
Did DECK beat its long-term earnings growth trend and its industry?
DECK's trailing twelve-month earnings (from 31 December 2019) of US$284m has increased by 8.8% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 19%, indicating the rate at which DECK is growing has slowed down. To understand what's happening, let’s take a look at what’s transpiring with margins and if the entire industry is facing the same headwind.
In terms of returns from investment, Deckers Outdoor has invested its equity funds well leading to a 25% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 15% exceeds the US Luxury industry of 6.0%, indicating Deckers Outdoor has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Deckers Outdoor’s debt level, has increased over the past 3 years from 16% to 25%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 3.7% to 3.3% over the past 5 years.
What does this mean?
Though Deckers Outdoor's past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Deckers Outdoor gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Deckers Outdoor to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for DECK’s future growth? Take a look at our free research report of analyst consensus for DECK’s outlook.
Financial Health: Are DECK’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2019. This may not be consistent with full year annual report figures.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
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