Deckers Outdoor (DECK) Soars To A 52-Week High, Time To Cash Out?

Have you been paying attention to shares of Deckers Outdoor (NYSE:DECK) ? Shares have been on the move with the stock up 16.6% over the past month. DECK hit a new 52-week high of $109.34 in the previous session. Deckers Outdoor has gained 33.8% since the start of the year compared to the 2.1% move for the Consumer Discretionary sector and the 12.6% year-to-date return for its peer group.

What's Driving the Outperformance?

The stock has a great record of positive earnings surprises, having beaten the Zacks Consensus Estimate in each of the last four quarters. In its last earnings report on May 24, 2018, Deckers Outdoor reported EPS of $0.5 versus the Zacks Consensus Estimate of $0.18 while it beat the consensus revenue estimate by 6.21%.

For the current fiscal year, Deckers Outdoor is expected to post earnings of $5.79 per share on $1.93 billion in revenues. This represents a 4.36% change in EPS on a 1.22% change in revenues. For the next fiscal year, the company is expected to earn $6.5 per share on $1.97 billion in revenues. This represents a year-over-year change of 13.19% and 2.03%, respectively.

Valuation Metrics

Deckers Outdoor may be at a 52-week high right now, but what might the future hold for DECK? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.

On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

Deckers Outdoor has a Value Score of A. The stock's Growth and Momentum Scores are A and C, respectively, giving the company a VGM Score of A.

In terms of its value breakdown, the stock currently trades at 18.5X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 11.8X versus its peer group's average of 14.8X. Additionally, the stock has a PEG ratio of 1.6. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Deckers Outdoor Corporation Price and Consensus

Deckers Outdoor Corporation Price and Consensus | Deckers Outdoor Corporation Quote

Zacks Rank

We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Deckers Outdoor currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 and Style Scores of A or B, it looks as if Deckers Outdoor fits the bill. Thus, it seems as though DECK shares could have a bit more room to run in the near term.

How Does Deckers Outdoor Stack Up to the Competition?

Shares of Deckers Outdoor have been rising, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also impressive, including Iconix Brand Group (NASDAQ:ICON) , Rocky Brands (NASDAQ:RCKY) , and Xtep International Holdings (OTC:XTEPY) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.

The Zacks Industry Rank is in the top 23% of all the industries we have in our universe, so it looks like there are some nice tailwinds for DECK, even beyond its own solid fundamental situation.