DECK: Is It Time To Buy Puts on Deckers?

The company is a global leader in designing, marketing, and distributing footwear, apparel, and accessories. Its core business revolves around five proprietary brands: 'UGG', 'HOKA', 'Teva', 'AHNU', and 'Koolaburra'. These brands cater to diverse markets, including fashion and casual lifestyle, performance, running, and outdoor activities. The company sells its products through domestic and international retailers, distributors, and directly to consumers via its Direct-to-Consumer (DTC) channel, encompassing e-commerce and retail stores. The company differentiates itself by offering diverse product lines emphasizing fashion, authenticity, functionality, quality, and comfort, tailored to various activities, seasons, and demographic groups. The company outsources production to independent manufacturers, primarily in Southeast Asia.

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DECK's technical outlook is decidedly bearish. The stock price has been in a consistent downtrend over the past 90 days, falling from approximately $123 to the current price of $79.52. It's trading below its 50-day SMA, which currently sits at $105.74, and well below its 200-day SMA of $118.84, confirming the persistent downtrend. Momentum indicators are also signaling weakness. The MACD is negative and trending further downwards, with the MACD line far below the signal line, and the RSI at 29.49 indicates oversold conditions, but doesn't necessarily mean an immediate reversal. The ADX is high at 39.29, suggesting a strong trend in place. The stochastic oscillator is showing oversold conditions, but this signal is unreliable in a strong downtrend. The Bollinger Bands also point to continued weakness, with the price trading near the lower band, indicating potential for further downside. Overall, the technical indicators suggest continued bearish momentum for DECK in the coming 1-3 months.

Deckers' MD&A presents a generally positive picture, although some caution is warranted. `Net sales` for the six months ended September 30, 2025, increased by 12.1% to $2,395,378 compared to the prior year, driven by strong performances from the HOKA (up 15.3% to $1,287,205) and UGG (up 12.3% to $1,024,679) brands. However, 'Other brands' net sales decreased 22.5% to $83,494. Gross margin decreased slightly, by 30 basis points, to 56.0%. For the three months ended September 30, 2025, `Net sales` increased 9.1% to $1,430,840 from $1,311,320 in 2024, and gross margin increased to 56.2% from 55.9%. `Net cash provided by operating activities` for the six months ended September 30, 2025, was $44,233, a significant increase from $22,100 in the prior period. The company is making investments in its global retail store footprint and managing its cash repatriation strategy. The company also entered into a 3PL service agreement with a non-cancellable minimum commitment of approximately $93,611 through March 31, 2029. Overall, the company is demonstrating growth, particularly in its key brands, and is managing its liquidity effectively.

Deckers Brands' Q1 fiscal year 2026 earnings call reveals a moderately bullish outlook, driven by strong brand performance. Stefano Caroti highlighted that fiscal year 2026 is 'off to a solid start,' with both HOKA and UGG exceeding expectations. Overall revenue grew 17% to $965 million, and diluted earnings per share increased 24% to $0.93. International markets were a significant driver, contributing to a 50% increase in international revenue. HOKA's revenue increased 20% to $653 million, with wholesale up 30% and DTC up 3%. UGG's revenue rose 19% to $265 million, with wholesale increasing 30% and DTC decreasing 1%. While the company is not providing formal full-year guidance due to macroeconomic uncertainties and tariffs, they expect HOKA to continue as the fastest-growing brand and UGG to continue to grow. For Q2 fiscal year 2026, they anticipate revenue between $1.38 billion and $1.42 billion, with HOKA increasing approximately 10% and UGG increasing at least mid-single digits. Gross margin is expected to be between 53.5% and 54%, and diluted earnings per share are projected to be between $1.50 and $1.55. Despite tariff headwinds, management remains confident in their brands' ability to grow and gain market share.

DECK's financial performance reveals a positive trajectory over the last several quarters. Revenue has grown from $959.8M in Q4 2024 to $1.43B in Q2 2025, indicating strong top-line growth. The gross profit ratio has remained relatively stable, fluctuating between 0.557 and 0.603, suggesting consistent profitability in core operations. Operating cash flow, while volatile, shows a recent positive trend, with $36.1M in Q1 2026. Total debt has increased from $266.9M in Q4 2024 to $350.7M in Q2 2026, indicating increased leverage, but the company maintains a negative net debt of -$1.06B. Overall, DECK demonstrates solid revenue growth, stable profitability, and positive operating cash flow, offset slightly by increasing debt, suggesting a moderately bullish outlook for the company in the near term.

The company presents a moderately bullish investment profile based on its key metrics and financial ratios. Revenue has shown positive growth, indicating market traction, although the pace has slowed somewhat. Profitability, as reflected in the gross margin, remains healthy and consistent. The Return on Equity (ROE) suggests reasonable efficiency in generating profit from shareholder equity. The Price-to-Earnings (P/E) ratio indicates the stock is trading at a premium, but this may be justified if future growth expectations remain strong. The Debt-to-Equity ratio is relatively stable and manageable, suggesting a balanced approach to leverage. The Current Ratio indicates the company has adequate liquidity to meet its short-term obligations. Overall, the company demonstrates a positive trajectory with a solid foundation, but investors should monitor revenue growth trends and valuation multiples to ensure they remain aligned with the company's performance.