DECK The Halls With UGGs And Flip Flops!

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DLP Investing
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Summary

  • In a tough operating environment, Deckers' revenue is still increasing, but on a constant-currency basis, growth is impressive.
  • Downside risks exist, but are outweighed by numerous catalysts, including an industry-leading omni-channel, share buybacks, and global expansion.
  • On any number of metrics, Deckers is undervalued when compared to its peers.

It's that time of year again! Stores are decked out with festive holiday decor, shoppers are hitting the malls (and tablets!), and investors are anticipating another Santa Claus rally. If you are fortunate enough to have completed your holiday shopping and happen to have a little bit of that Christmas bonus left over, you have a few options. You could go buy yourself a new pair of UGGs, possibly new Teva sandals, or, if you're so inclined, - 'tis the season, after all - a pair of Sanuk yoga slings for your wife. But, being the intelligent investor that you are, you know the prudent move would be to invest your funds in a growing company with the good chance that in a couple of years' time, you could buy twice as many sheepskin boots as you could right now. Enter Deckers.

Deckers Brands (NYSE:DECK) is a California-based footwear and apparel company founded in 1973 that embodies the west-coast outdoor surfer lifestyle. The company's share price has been more than halved from its December 2014 high of around $99 to its current selling price at the time of writing of $47.38, which equates to a market capitalization of around $1.5 billion. While the retail sector is notorious for its unpredictability due in large part to consumers' finicky and constantly evolving tastes, the strong underlying fundamentals of Deckers combined with the excessive 2015 sell off of its shares offers a lucrative buying opportunity for the astute value investor.

History and Company Structure

As mentioned, the company was founded in 1973 by University of California, Santa Barbara, alum Doug Otto and Karl F. Lopker. Deckers' original intent to create and market new comfortable casual footwear resulted in what became the sandal many of us still wear today. Angel Martinez, Deckers Outdoor Corp. President and CEO, had this to say about Otto in

This article was written by

DLP Investing profile picture
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I am a civil engineer and individual investor. I spend a substantial amount of time reading and researching commodities, macro economic trends, and value investing strategies. With my background in the construction industry, I am able to analyze real world information compared to data provided by media outlets. I plan to eventually transition my career towards the financial sector.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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