Deckers Outdoor Corporation DECK released its third-quarter fiscal 2025 results after the closing bell last Thursday, sparking fresh debate among investors regarding the stock's future trajectory. As a well-established player in the competitive retail apparel and shoes industry, Deckers has carved out a niche with its blend of innovation, brand strength and market positioning. 

However, with the latest earnings now on the table, investors are faced with a crucial decision: Should they increase their stake, maintain their current positions or sell the stock?

Deckers’ Q3 Performance: Key Takeaways

Deckers delivered an impressive third-quarter performance, surpassing expectations and raising its fiscal 2025 outlook. The standout performances of its HOKA and UGG brands were key drivers behind the strong results. (Read: Deckers Q3 Earnings Beat on HOKA & UGG Strength, FY25 View Up)

The HOKA brand maintained its impressive performance, achieving a 23.7% year-over-year increase in sales, reaching $530.9 million, which exceeded our projected figure of $514 million. The UGG brand exhibited remarkable growth of 16.1% in net sales of $1,244 million, which surpassed our estimate of $1,082.8 million.

Deckers ended the quarter with a robust cash position of $2,240.9 million and no outstanding borrowings, underscoring its financial resilience. Inventory levels remain well-managed at $576.7 million, up 7% year over year, ensuring supply-chain flexibility without excessive stock buildup. The company also repurchased $44.7 million worth of shares in the quarter, signaling confidence in its long-term growth prospects. 

Deckers now envisions a 15% increase in fiscal 2025 net sales, reaching $4.9 billion, with HOKA anticipated to grow by around 24% and UGG by 10%. This is up from its earlier projection of $4.8 billion in net sales. Management now foresees fiscal 2025 earnings in the range of $5.75-$5.80 per share, up from $4.86 reported last year. Deckers had earlier guided earnings between $5.15 and $5.25 per share.

How Consensus Estimates Stack Up for Deckers Post Q3 Earnings

The Zacks Consensus Estimate for earnings per share has seen upward revisions. Over the past seven days, analysts have increased estimates for the current and next fiscal years by 2.6% to $5.83 and 0.9% to $6.55 per share, respectively. The estimates suggest year-over-year increases of 20% and 12.3%, respectively.

However, analysts have lowered their estimates by 18.3% to 58 cents for the final quarter of fiscal 2025 owing to likely slower growth, margin contraction and increased cost pressures.

See the Zacks Earnings Calendar to stay ahead of market-making news.
 

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Why DECK Remains a Compelling Stock for Investors

Deckers’ strong brand portfolio, innovative product launches and strategic market expansion position it favorably in the market. The company’s focus on enhancing direct-to-consumer channels and growing international presence highlights its ability to navigate a competitive landscape that includes players like Abercrombie & Fitch Co. ANF, American Eagle Outfitters, Inc. AEO and The Gap, Inc. GAP.

Deckers has consistently delivered strong financial results, driven by double-digit revenue growth and expanding profit margins. The company's latest earnings report highlighted a solid increase in net sales, led by the strength of its HOKA and UGG brands. Moreover, disciplined cost management and operational efficiencies have contributed to margin expansion, reinforcing Deckers' ability to generate sustainable earnings growth.

HOKA has emerged as a powerhouse in the athletic footwear space, delivering exceptional growth through product innovation and increasing consumer demand. Its performance running shoes have gained traction among both professional athletes and casual runners. Meanwhile, UGG continues to see stable demand, benefiting from brand diversification efforts. The combined strength of these brands positions Deckers for long-term success.

Deckers has been aggressively expanding its global footprint, particularly in key international markets such as Europe and China. This strategic expansion has enabled the company to tap into new consumer bases and mitigate regional revenue concentration risks. Deckers’ International net sales rose 28.5% to $657.9 million during the third quarter of fiscal 2025. The direct-to-consumer strategy has further strengthened brand engagement, leading to improved sales conversion rates and higher margins. Direct-to-consumer net sales advanced 17.9% to $1,011 million, while DTC comparable net sales surged 18.3%.

Is DECK’s Stock Price Overvalued or Premium Justified?

Shares of this Goleta, CA-based company have fallen 17% in the past month compared with the industry’s decline of 3.8%.
 

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Despite the recent decline, the stock is trading at a premium to its peers. Deckers’ forward 12-month price-to-earnings ratio stands at 26.71, higher than the industry’s ratio of 20.19 and the S&P 500's ratio of 22.25.
 

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Should You Buy DECK Stock Now?

Deckers has demonstrated robust performance in its third-quarter fiscal 2025 results, underscored by strong sales growth in its HOKA and UGG brands. The company's strategic initiatives, including expanding direct-to-consumer channels and international markets, have positioned it well for sustained growth. Despite the recent dip in its stock price, Deckers' solid financial position and optimistic outlook for fiscal 2025 earnings and sales growth highlight its resilience and potential for long-term value creation. Investors may consider this Zacks Rank #1 (Strong Buy) stock a compelling investment opportunity. You can see the complete list of today’s Zacks #1 Rank stocks here.

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Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report

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