What to Note Ahead of Deckers Outdoor's (DECK) Q2 Earnings
Deckers Outdoor Corporation DECK is likely to register an increase in the top line from the last fiscal year’s quarterly reading when it reports second-quarter fiscal 2024 earnings on Oct 26, after market close. The Zacks Consensus Estimate for revenues is pegged at $958.6 million, indicating an improvement of 9.5% from the prior fiscal year’s quarterly reported figure.
The bottom line of this designer, marketer and distributor of footwear, apparel and accessories is expected to rise from the earlier fiscal year’s quarterly figure. Over the past 30 days, the consensus estimate for earnings per share in the fiscal second quarter has decreased by a penny to $4.40, suggesting growth of 15.8% from the last fiscal year’s quarterly level.
In the last reported quarter, this Goleta, CA-based player’s bottom line outperformed the Zacks Consensus Estimate by 8.6%.
Key Factors to Note
Deckers has been grappling with weakness across its UGG, Teva and Sanuk brands owing to a tepid demand environment for its products. Also, challenges within the Other brands, primarily composed of Koolaburra, might have hurt the company’s performance in the second quarter of fiscal 2024. We expect net sales from the Sanuk and Other brands to decline by 5.7% and 13%, respectively, in the fiscal second quarter.
Rising sales and operating expenses have been a concern for the company over the past few quarters. For instance, in the first quarter of fiscal 2024, its cost of sales increased by 3% year over year while selling, general and administrative (“SG&A”) expenses surged by 15.6%. The company’s investment in major business areas, including strategic marketing, supply-chain footprint and e-commerce capabilities, might have hurt its margin and profitability in the to-be-reported quarter.
For the quarter under review, we expect SG&A expenses of about $334 million, suggesting a rise of 13.5% year over year. As a percentage of revenues, the metric is estimated to be 34.9%, indicating an increase of 130 basis points year over year.
Supply chain issues and related expenses, labor shortages, inflationary pressures and geopolitical tensions are some headwinds Deckers might have encountered during the fiscal second quarter. Given the company’s extensive geographic presence, a stronger U.S. dollar might have also hurt its overseas business in the fiscal second quarter.
That said, Deckers’ second-quarter performance is likely to have benefited from strength in the HOKA brand, solid omni-channel capabilities, investment in logistics infrastructure and customer-centric product and marketing strategies. The company’s focus on expanding brand assortments, introducing an innovative line of products and enhancing direct-to-consumer business contribution might have acted as a tailwind.
Deckers Outdoor Corporation Price and EPS Surprise
Deckers Outdoor Corporation price-eps-surprise | Deckers Outdoor Corporation Quote
What the Zacks Model Unveils
Our proven model doesn’t conclusively predict an earnings beat for Deckers this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, but that’s not the case here, as elaborated below.
Deckers has an Earnings ESP of +5.38%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
DECK currently has a Zacks Rank #4 (Sell).
Stocks With the Favorable Combination
Here are three companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in the upcoming releases:
Performance Food Group Company PFGC currently has an Earnings ESP of +3.13% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company is expected to report bottom-line growth when it releases its quarterly results. The Zacks Consensus Estimate for earnings is pinned at $1.11 per share, indicating an increase of 2.8% from the year-ago quarter’s reported level.
Its revenues are anticipated to have improved year over year. The consensus mark for the same is pegged at $15 billion, implying a 1.9% increase from that reported in the prior-year period. PFGC has a trailing four-quarter average earnings surprise of 15.9%.
Ulta Beauty ULTA currently has an Earnings ESP of +3.75% and a Zacks Rank #3. The company is expected to register a bottom-line decline when it reports third-quarter fiscal 2023 results. The Zacks Consensus Estimate for earnings is pinned at $4.98 per share, indicating a fall of 6.7% from the year-ago quarter’s reported number.
The company’s revenues are anticipated to increase year over year. The consensus mark for the same is pegged at $2.5 billion, indicating growth of 6.2% from that reported in the year-ago quarter. ULTA has a trailing four-quarter average earnings surprise of 12.9%.
CVS Health CVS currently has an Earnings ESP of +0.98% and a Zacks Rank #3. CVS is likely to record top-line growth when it reports second-quarter 2023 results.
The Zacks Consensus Estimate for revenues is pegged at $88.2 billion, indicating an 8.7% improvement from the prior-year quarter’s actual. The consensus mark for earnings is pinned at $2.13 per share, implying a 1.9% increase from that reported in the year-ago quarter. It has a trailing four-quarter earnings surprise of 4.8%, on average.
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Deckers Outdoor Corporation (DECK) : Free Stock Analysis Report
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