QS Research · Michael Burry's Scion Capital analyst template · 2006
DECKERS OUTDOOR CORP (DECK)
As of 2026-11-08 · 13/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case -3% · downside -15% · upside +27%
The market is treating Q2 FY2027's -6.4% DTC comparable decline and the FY2027 revenue cut as permanent, while TTM EBITDA of $1.39B, FCF of $1.05B and a 9.1% FCF yield still show substantial earnings power. The EPS raise is largely a one-off: FY2027 guidance includes ~$0.52 of IEEPA refunds, so operating momentum is weaker than the headline. At today's 7.5x EV/EBITDA, $1.39B EBITDA gives $10.4B EV; adding $1.21B cash and subtracting $375.2M of leases gives ~$11.26B, or ~$84/share (-3%). A 6.5x downside case gives ~$74 (-15%) and a 10.0x upside case ~$110 (+27%), so the base case is far short of the +30% needed for a long and the upside is above the +25% short test. This is a watch: the multiple is cheap, but the operating trend and one-off EPS boost mean the mispricing is not yet actionable.
Key numbers
- Share price: $86.71
- Market cap: $11.57B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $5.58B
- EV / EBITDA (TTM): 7.5x
- P/E (TTM): 10.9x
- Price / book: 4.99x
The 15 boxes
- ✓ 1. Long-form business notes
Deckers designs, markets and distributes footwear, apparel and accessories, now primarily under HOKA, UGG and Teva, through wholesale and DTC; all production is outsourced. Between FY2021 and FY2026 the brand portfolio narrowed from five proprietary brands to three, with Sanuk sold and Koolaburra and AHNU phased out, while the Company-owned store fleet grew from 140 to 203 stores and the latest 10-K reports three reportable segments: HOKA, UGG and Other brands. FY2026 revenue was $5.47B, gross profit $3.16B, operating income $1.26B, net income $1.02B and operating cash flow $1.18B, versus FY2021 revenue of $2.55B and operating cash flow of $596.2M. The sources do not disclose unit volumes, brand-level revenue or profit, or channel gross margins.
- ✓ 2. Competitive advantage
Sources show a real brand/IP asset and scale economics: revenue grew from $2.55B in FY2021 to $5.47B in FY2026, gross margin rose from 53.7% to 57.8%, and operating margin from 19.8% to 23.0%. But the FY2026 10-K calls the industry highly competitive, cites larger rivals with greater resources, and says barriers to entry have been reduced, so the record supports a strong brand rather than a clearly durable moat. It competes across fashion, casual, lifestyle and athletic footwear, branded apparel and private-label retail, with direct/indirect competition against HOKA and UGG.
- ✓ 3. 10-Q takeaways
Q2 FY2027 (three months ended September 30, 2026) sales rose 3.5% to $1.481 billion (2.8% constant currency) on HOKA +6.8% and UGG +3.5%, but DTC comparable net sales fell 6.4% and domestic sales slipped 0.4%. Gross margin jumped to 60.5% from 56.2% largely on $46.0 million of IEEPA tariff net refunds (plus $3.0 million interest) worth ~310 bps of margin and ~$0.28 of EPS — a one-off, not operating improvement; SG&A still grew to $505.7 million and operating income was $389.5 million. Full-year FY2027 EPS guidance was raised to $7.80-$7.95, including ~$0.52 of tariff-refund benefit, on sales of $5.700-$5.725 billion and a ~23% operating margin. Cash fell to $1.210 billion from $1.414 billion while inventories rose to $860.8 million, and 1H FY2027 operating cash flow turned negative at -$9.3 million.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ✓ 11. Impression of the shareholder letter
Filled; members read this box.
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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