DECKERS OUTDOOR CORP (NYSE:DECK): A Strong GARP Candidate
By Mill Chart
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DECKERS OUTDOOR CORP (NYSE:DECK) is a footwear and apparel company known for brands like UGG, HOKA, and Teva. The company has shown consistent growth while maintaining reasonable valuations, making it an interesting candidate for investors following a growth-at-a-reasonable-price (GARP) strategy.
GARP investing blends elements of both growth and value investing. While growth investors seek companies with high earnings expansion, value investors look for undervalued stocks. GARP aims to find businesses with sustainable growth at sensible prices—exactly what Peter Lynch advocated in his investment philosophy.
Why DECKERS OUTDOOR CORP Fits the GARP Approach
Strong Earnings Growth
DECKERS OUTDOOR CORP has delivered an impressive 5-year EPS growth of 27.07%, well above the 15% threshold often used in GARP screens. This indicates the company has consistently expanded profitability, a key factor for long-term investors.
Attractive Valuation Metrics
Despite its growth, DECK remains reasonably priced. Its PEG ratio (5Y) of 0.76—below the ideal threshold of 1—suggests the stock is undervalued relative to its earnings growth. The P/E ratio of 17.86 is also below the S&P 500 average, further supporting its valuation appeal.
Financial Health
The company boasts a debt-free balance sheet (Debt/Equity of 0), a rare strength in today’s market. Additionally, its current ratio of 3.17 indicates strong liquidity, ensuring it can meet short-term obligations comfortably.
High Profitability
With a Return on Equity (ROE) of 35.81%, DECK significantly outperforms industry peers. This high profitability suggests efficient use of shareholder capital, a positive sign for sustained growth.
Fundamental Analysis Summary
Our fundamental analysis report rates DECKERS OUTDOOR CORP 8 out of 10, highlighting:
- Excellent profitability (ROE, ROIC, and margins above industry averages).
- Strong financial health (no debt, high liquidity, and improving solvency metrics).
- Reasonable valuation (PEG below 1, P/E below market average).
- Consistent revenue and earnings growth (double-digit increases in recent years).
For investors seeking a balanced mix of growth and value, DECK presents a compelling case.
