Deckers (DECK) Rises 6% In 30 Days: Will The Rally Last?

Shares of Deckers Outdoor Corporation (NYSE:DECK) have declined 1.6% in the past three months, underperforming the Zacks categorized Shoe & Retail Apparel industry’s increase of 2.7%. However, the stock has made a sharp comeback in the past one month gaining nearly 6% in comparison with industry’s decline of 3%. So, let’s find out whether the momentum gained will sustain in the near term.

Hidden Catalysts

Deckers is targeting profitable markets while remaining focused on product innovations and store augmentation. Management is eyeing opportunities for store expansion, targeting underpenetrated markets, enhancing eCommerce capabilities and transitioning to a direct subsidiary model from a distributor model outside the U.S.

In keeping with the changing trends, Deckers has been constantly developing its eCommerce portal to capture incremental sales. The company has made substantial investments to strengthen online presence and improve shopping experience for customers. Further, it is focused on opening smaller concept omni-channel outlets and expanding programs such as Retail Inventory Online, Infinite UGG, Buy Online, Return In Store, and Click and Collect to enhance customers shopping experience.

The company is also focusing on product and marketing strategies that are more skewed toward customers and in this regard it is implementing customer relationship management (CRM) software and concentrating on loyalty program.

Further, Deckers’ has an impressive long-term earnings growth rate of 8.8%. Additionally, the company has VGM Score of “A”.

Bottom Line

We hope that aforementioned initiatives help improve Deckers’ performance in the coming quarters, which posted a negative earnings surprise in third-quarter fiscal 2017 after registering six straight quarters of earnings beat. The dismal performance compelled management to trim net sales and earnings projection. (Read more: Deckers Crashes on Q3 Earnings Miss and Bleak View)

We believe that the company’s stock price has already factored in the dismal performance and muted outlook, and the recent rebound may be seen as a sign that it has regained investors’ confidence.

Zacks Rank & Stocks to Consider

Deckers currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the retail sector that warrant a look include Burlington Stores, Inc. (NYSE:BURL) , The Children's Place, Inc. (NASDAQ:PLCE) and Best Buy Co., Inc. (NYSE:BBY) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Burlington Store delivered an average positive earnings surprise of 26.3% in the trailing four quarters and has a long-term earnings growth rate of 15.9%.

Children's Place delivered an average positive earnings surprise of 39% in the trailing four quarters and has a long-term earnings growth rate of 8%.

Best Buy delivered an average positive earnings surprise of 27.7% in the trailing four quarters and has a long-term earnings growth rate of 10.5%.

Zacks’ Best Private Investment Ideas

While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.

Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.Click here for Zacks' private trades >>