Deckers Outdoor Corp (NYSE:DECK) Stands Out as a Quality Investment in Caviar Cruise Screen

For investors aiming to construct a durable, long-term portfolio, the ideas of quality investing offer a strong framework. This approach centers on finding and owning the world's superior businesses—companies with lasting competitive strengths, sound financial condition, and the capacity to produce high returns on capital. The "Caviar Cruise" stock screen is made to methodically filter for these characteristics, highlighting measurable numbers like steady revenue and profit increase, high returns on invested capital, solid free cash flow generation, and an acceptable debt level. The aim is not to locate temporary discounts, but to uncover businesses deserving of being owned for years, or even generations.

A Look at Results and Earnings

DECKERS OUTDOOR CORP (NYSE:DECK) appears as a prominent candidate from this strict screening method. The company, recognized for its leading brands such as UGG and HOKA, displays the sort of financial superiority that quality investors seek. The screen's main filters are created to identify companies with a confirmed history and effective operations, and Deckers' financial statements satisfy these conditions with clear force.

• Strong Earnings Increase: A central idea of quality investing is not only increase, but earnings increase. The Caviar Cruise screen demands a company's five-year EBIT (earnings before interest and taxes) increase to exceed its revenue increase, pointing to better operational effectiveness and possible pricing strength. Deckers performs well here, with a five-year EBIT CAGR of 28.3% clearly surpassing its good revenue increase of 7.5%. This shows the company is effectively turning more of each sales dollar into operating earnings.
• Outstanding Capital Use: Maybe the most important number for a quality investor is the return on invested capital (ROIC), which calculates how well a company produces earnings from its capital foundation. The screen establishes a high minimum at 15%. Deckers rises above this, reporting an ROIC (excluding cash, goodwill, and intangibles) of about 69.8%. This outstanding number implies the company's brands and business system are highly profitable and that leadership is using capital with notable effectiveness.
• Careful Financial Stewardship: Quality companies are not weighed down by debt. The screen uses the Debt-to-Free Cash Flow number to judge how fast a company could ideally settle its debts. A number under 5 is viewed as sound. Notably, Deckers has no debt, leading to a number of 0.0. This strong financial position offers great ability to manage economic changes and fund future increase without monetary pressure.
• Substantial Earnings: The "Profit Quality" number evaluates how much of a company's reported net income is changed into real free cash flow—the actual cash on hand for dividends, share repurchases, or new investment. The screen searches for a five-year average above 75%. Deckers states an average of 97.2%, showing that its earnings are of substantial quality and not only bookkeeping results. This solid cash production supports the company's financial condition.

Basic Condition and Price Assessment

A wider examination of Deckers' basic analysis report confirms the results from the Caviar Cruise screen. The company receives an overall basic rating of 7 out of 10, with specific force in two areas important for long-term owners.

• Earnings & Financial Condition: Deckers gets a nearly ideal 9 out of 10 for earnings, led by sector-leading margins and returns on equity and assets. Its financial condition score is a perfect 10, backed by its no-debt position, solid liquidity numbers, and a strong Altman-Z score pointing to very little bankruptcy danger. This pairing of high earnings and clean financial position is a sign of a quality business.
• Increase & Price Assessment: The company displays a solid history of increase, with a five-year EPS CAGR over 31%. While future increase projections are more measured, they stay positive. From a price assessment view, Deckers seems fairly valued. Its P/E number of 14.1 is lower than both the wider S&P 500 and a large part of its sector competitors, suggesting the market may not be completely valuing its quality traits and financial force.

Is Deckers a Quality Investment?

For an investor using the Caviar Cruise method, DECKERS OUTDOOR CORP offers a strong argument. It effectively meets the screen's numerical standards made to find companies with a lasting competitive advantage—in this instance, probably driven by its solid brand collection. The outstanding ROIC and no-debt situation point to a better business system and careful leadership, while the high profit quality verifies the earnings are real.

While the screen finds numerical superiority, quality investing also requires subjective evaluation on aspects like brand defenses, leadership skill, and endurance to economic declines—topics for an investor to study more. The present valuation, which is not high compared to its competitor group and the market, offers a sensible starting point for a business of this quality.

Find Other Quality Candidates

The Caviar Cruise screen is a useful beginning step for creating a watchlist of superior companies. You can review the present screen outcomes and modify the standards to match your own investment plan via this link.

Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation, or an offer to buy or sell any security. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.