DECK

We rate DECKERS OUTDOOR CORP (DECK) as a Hold with a composite score of 64.3/100 at a current price of $120.91. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in quality (85th percentile) and value (79th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (39th percentile) and momentum (40th percentile) tempers our overall conviction. We assign a Narrow Moat rating (59/100), High uncertainty, and Exemplary capital allocation.

Key items to watch: sustainability of the current growth rate. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

DECKERS OUTDOOR CORP holds a top-quartile position (#0 of 50) within the Manufacturing sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 64.3/100 places it at rank #326 in our full 7,333-stock universe. With a $15.0B market capitalization, DECKERS OUTDOOR CORP operates at meaningful scale within the Manufacturing sector, providing competitive advantages in distribution, procurement, and customer reach.

Revenue is growing at 49%, though momentum at the 40th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 58% (+15.5pp vs sector) narrow to operating margins of 26% (+24.3pp vs sector) and net margins of 20.7%, yielding a gross-to-net conversion rate of 36%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $120.91, DECKERS OUTDOOR CORP appears undervalued relative to its fundamentals. Our value factor score of 79/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 12.5x (a 44% discount to the sector median of 22.3x), EV/EBITDA of 10.1x (near the sector median), P/B of 6.5x, P/S of 2.7x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a High uncertainty rating to DECKERS OUTDOOR CORP. Key risk factors include . The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

We identify no major risk factors at this time. The company's stability factor sits at the 47th percentile with quality at the 85th percentile, both of which support our low-risk assessment. The absence of material leverage, profitability, or volatility concerns reduces the likelihood of a permanent capital loss scenario.

Key risk mitigants include: healthy gross margins of 58% provide a buffer against cost pressures. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.

We rate DECKERS OUTDOOR CORP's capital allocation as Exemplary. Management demonstrates a strong track record of balancing reinvestment with shareholder returns, evidenced by returns on equity of 51.5%, best-in-class net margins of 20.7%. Exemplary allocators typically generate returns on equity above 20% while maintaining debt-to-equity below 50% — DECKERS OUTDOOR CORP meets this high bar.

The balance sheet remains conservatively managed, providing financial flexibility for opportunistic investments while maintaining a margin of safety for shareholders. We note that the combination of 32.8% return on assets and controlled leverage suggests management is deploying capital at rates well above the cost of capital — the hallmark of exemplary stewardship.

In summary, DECKERS OUTDOOR CORP receives a Hold rating with a composite score of 64.3/100 (rank #326 of 7,333). Our quantitative framework assigns a Narrow Moat (59/100, trend: stable), High uncertainty, and Exemplary capital allocation. The average factor score across quality, value, momentum, stability, and investment is 58/100.

Our analysis supports a neutral stance on DECKERS OUTDOOR CORP. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.