Deckers Outdoor Stock Shows Every Sign Of Being Significantly Overvalued
- By GF Value
The stock of Deckers Outdoor (NYSE:DECK, 30-year Financials) shows every sign of being significantly overvalued, according to GuruFocus Value calculation. GuruFocus Value is GuruFocus' estimate of the fair value at which the stock should be traded. It is calculated based on the historical multiples that the stock has traded at, the past business growth and analyst estimates of future business performance. If the price of a stock is significantly above the GF Value Line, it is overvalued and its future return is likely to be poor. On the other hand, if it is significantly below the GF Value Line, its future return will likely be higher. At its current price of $318.63 per share and the market cap of $9 billion, Deckers Outdoor stock is believed to be significantly overvalued. GF Value for Deckers Outdoor is shown in the chart below.
Because Deckers Outdoor is significantly overvalued, the long-term return of its stock is likely to be much lower than its future business growth, which averaged 10.3% over the past three years and is estimated to grow 8.75% annually over the next three to five years.
Link: These companies may deliever higher future returns at reduced risk.
It is always important to check the financial strength of a company before buying its stock. Investing in companies with poor financial strength have a higher risk of permanent loss. Looking at the cash-to-debt ratio and interest coverage is a great way to understand the financial strength of a company. Deckers Outdoor has a cash-to-debt ratio of 4.36, which is better than 80% of the companies in the industry of Manufacturing - Apparel & Accessories. The overall financial strength of Deckers Outdoor is 8 out of 10, which indicates that the financial strength of Deckers Outdoor is strong. This is the debt and cash of Deckers Outdoor over the past years:
Companies that have been consistently profitable over the long term offer less risk for investors who may want to purchase shares. Higher profit margins usually dictate a better investment compared to a company with lower profit margins. Deckers Outdoor has been profitable 9 over the past 10 years. Over the past twelve months, the company had a revenue of $2.4 billion and earnings of $12.86 a share. Its operating margin is 19.76%, which ranks better than 94% of the companies in the industry of Manufacturing - Apparel & Accessories. Overall, the profitability of Deckers Outdoor is ranked 8 out of 10, which indicates strong profitability. This is the revenue and net income of Deckers Outdoor over the past years: