Deckers Outdoor Corporation (DECK)

Conclusion

Deckers Outdoor designs, markets and distributes footwear, apparel and accessories under the UGG, HOKA and Teva brands, selling through retailers, distributors and its own direct-to-consumer channels. At a price of 85.00 USD on 2026-11-02, the market capitalisation is 11.3 billion USD.

The verdict is undervalued. The trailing P/E of 10.7 compares with a ten-year median of 22.2, and EV/EBITDA of 7.4 compares with 12.5. The DCF gives 162.27 USD per share at a discount rate of 10.51%, and the fair value from historical multiples is 130.09 USD. The fair value band runs from 116.94 to 175.42 USD with a midpoint of 146.18 USD, a margin of safety of 72.0% at the current price. The reverse DCF implies growth of 0.1%, while revenue grew at a compound rate of 16.5% over five years and free cash flow per share at 17.9%.

What holds the case up is the net cash position, with net debt to EBITDA of -0.46, the ROIC of 64.4% against a WACC of 10.2%, and eight earnings beats in eight quarters. What could break it is the next-year EPS growth estimate of 5.7%, which is far below the five-year EPS record, and the 3.4% reduction in next-year estimates over the last 90 days. The share price has also fallen from 203.09 USD at 2024-12-31 to 85.00 USD today.

Financial health

Financial strength is green, held up by all four readings assessed as good. The company has a net cash position, with net debt to EBITDA of -0.46, and interest coverage of 292.97 on a trailing basis. The current ratio is 2.72, the quick ratio 1.76, and debt to equity 0.23. The Altman Z-score is 8.03, in the safe zone, although the Altman model was designed for manufacturers and the company's description points to a design and distribution business, so the reading is a rough guide. Insolvency risk: low, about 0.01% by the estimate of the Ohlson model over one to two years, based on figures as of 2026-03-31. The company does not report a debt maturity schedule in the data, so the timing of its obligations cannot be checked here.

Earnings quality

Earnings quality is green, supported by two good readings. Free cash flow conversion is 99.3% on a trailing basis and 96.2% over five years. The five-year change in share count is -3.1%, meaning net buybacks. The accrual ratio is -0.0431, so cash generation runs ahead of accounting profit. Stock-based compensation is 0.02% of revenue, and free cash flow after it is 1.05 billion USD. The Piotroski score is 6 of 8 evaluable tests passed. The Beneish M-score is not available. The company beat earnings expectations in all eight of the last eight quarters, with an average surprise of 25.3%. Current-year estimates rose 4.4% over 90 days, with 15 upward and 1 downward revision in the last 30 days. Next-year estimates fell 3.4% over 90 days, although 17 revisions in the last 30 days were upward and 1 downward.

Profitability

Profitability is green, with all four readings assessed as good. Gross margin is 58.9% against a ten-year median of 51.6%, operating margin 23.6% against 18.0%, and net margin 19.0% against 14.3%. The operating margin stability reading is 0.393. ROIC is 64.4% against a WACC of 10.2%, and the given ROIC minus WACC value is 54.2%. The five-year median ROIC is 86.9%. Return on equity is 45.7%, but the DuPont split shows a net margin of 18.7%, an asset turnover of 1.48x and an equity multiplier of 1.48x. Leverage therefore contributes only a modest part of the return, and margin and asset turnover do most of the work.

Growth

Growth is green, with three good readings and one neutral. Revenue compound growth is 14.7% over three years, 16.5% over five years and 11.3% over ten years. EPS compound growth is 29.6% over three years, 25.6% over five and 27.5% over ten. Free cash flow per share grew 38.2% over three years, 17.9% over five and 39.1% over ten. Revenue grew in 9 of the 10 comparable years. The neutral reading is the next-year EPS growth estimate of 5.7%, a sharp slowdown from the five-year record. The growth rate that the market is asked to believe in therefore depends on whether the company can return to its past pace.

Valuation

Valuation is green, with its single reading assessed as good, and the verdict is undervalued. Against their ten-year medians, the P/E of 10.7 compares with 22.2 (a premium of -51.7%), EV/EBITDA of 7.4 with 12.5 (-41.3%), price to free cash flow of 10.8 with 16.5 (-34.7%), price to sales of 2.03 with 2.74 (-25.7%), and price to book of 4.89 with 5.53 (-11.7%). The DCF gives 162.27 USD per share, with a discount rate of 10.51%, first-stage growth of 11.3% and terminal growth of 2.5%; the terminal value makes up 52.2% of it. The fair value from historical multiples is 130.09 USD. The fair value is built on fixed assumptions, including a 5% equity risk premium and capped growth, and is an order of magnitude, not a price target. The reverse DCF implies growth of 0.1%, against revenue compound growth of 16.5% and free cash flow per share growth of 17.9% over five years. The company pays no dividend, so the forward yield is 0%.

Risks

The weakest numbers are the next-year EPS growth estimate of 5.7% and the 3.4% cut to next-year estimates over 90 days. If earnings growth slows further, the low multiples could reflect slower profits rather than undervaluation. The DCF also rests on assumptions: a terminal value of 52.2% of its total and a discount rate of 10.51% mean small changes in either would move the 162.27 USD result considerably. The Beneish M-score is not available, so manipulation risk in the earnings figures cannot be ruled out from this data. The analysis also has limits: there is no debt maturity schedule and no revenue split by segment or brand, so it cannot show which product lines drive growth or how exposed the company is to any single brand.