NASDAQ:DECK
$95.09
(2/9 11:28AM)
-1.7%
| Open | $98.01 |
Mkt Cap | $1.2 Billion |
| High | $98.64 |
52Wk High | $113.10 |
| Low | $94.88 |
52Wk Low | $37.24 |
| Volume | 166,467 |
Avg Vol 10D | 369,100 |
Ockham's Rating/Recommendation Summary
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DECK Revenue
As a value investing shop, we are interested in seeing how DECK's revenues measure up against past performances. One easily understandable way of doing that is to compare Price to Sales per share levels over a given time frame. Assuming it is available, Ockham prefers to look at ten years of history (for this stock there are 10 years of history available) and we weigh recent years more heavily. This allows us to find weighted average historical high and low Price to Sales ratios, which give us a better idea of the stock's current underlying value. Using this method, we have established a high range for Price to Sales of 2.89x and the low end of the range at 0.99x.
With respect to these historically rational metrics, notice that the current Price to Sales per share ratio for DECK of 1.61x is well below its normal historic Price to Sales levels. At a price of $96.51, DECK is 17% below where we would expect to see it. Clearly, this stock looks undervalued compared to historical levels, at least on a Price to Sales basis. This will positively affect our analysis because it is rare to find a stock this far below historical norms, and we would expect some price appreciation to bring this metric back towards a more normal range.
DECK Cash Earnings
Looking at DECK specifically in their Cash Earnings capabilities, Ockham views DECK as significantly below their historical average multiples of Cash Earnings, as calculated by our proprietary analysis. It is incredibly important to understand that for DECK, the current level of Cash Earnings compared to its historical levels helps identify where DECK is in relation to what the investing community was willing to pay for this level of Cash Earnings in the past. With a historical high Cash Earnings per share ratio of 22.37 and a historical low Cash Earnings per share ratio of 7.67, an investor can relate where value becomes optimal.
So what does "significantly below" mean when we talk about Price to Cash Earnings numbers for DECK? From the Ockham perspective, we are looking specifically at DECK to see if the market is recognizing the huge disparity between DECK's past stock price to Cash Earnings ratio to today's levels. At a difference of 17% below the average historical Price to Cash Earnings ratio, our view would be quite positive at this point. However, as with all metrics, we need to also take other factors into account when looking at DECK. While we view better Cash Earnings metrics as very important, if the market is slow to identify this value, or if Cash Earnings were to fall from these levels, we would become more neutral in our stance.
DECK Dividends
While it is not necessary to pay an attractive dividend or a dividend at all, to receive a positive rating from Ockham, we view dividends as an additionally helpful measure in determining the future potential of any company. As far as our investing methodology goes, it is not necessary to pay a dividend in order to get a favorable rating, so as for right now DECK gets a neutral rating for the dividend portion of the model. As you can see, we are not receiving historical dividend information from our data provider on DECK at this time.
Deckers Outdoor Corporation (DECK) Discussed on CNBC's The Call
Deckers Outdoor Corporation is in the news. Find out how this impacts DECK trading on Ockham Research.
Periodical to feature some of the most innovative names on the cnbc managing editor tyler matheson co hosts the fastest growing company of 2009, and he is here now with a preview. >> let's give you a preview, an hour or so we told you about DECKERS OUTDOOR. Last year, arena resources topped the list of fastest-growing companies, and this year it has slipped to number eight. Still, the company has managed to chart incredible growth by digging for black gold where it's larger colleagues won't. Naturally, nobody can control the price of oil or gas. But arena can control where it hunts for it. >> these are proposed drilling various colors. >> reporter: the company started in the 1980s in oklahoma, focusing on secondary recovery, or behind-pipe potential.
“… R. Last year, arena resources topped the list of fastest-growing companies, and this year it has slipped to number eight. Still, the company has managed to chart incredible growth by digging for black gold where it's larger colleagues won't. Naturally, nobody can control the price of oil or gas. But arena can control where it hunts for it. >> these are proposed drilling various colors. >> reporter: the company started in the 1980s in oklahoma, focusing on secondary recovery, or behind-pipe potential. …”