On Friday Deckers (DECK) the maker of UGGs boots and Teva sandals (yes I am shocked they still exist) made a new 52 week high. And it was a 3 year high just a tad below $100, up 30% from the 52 week low made in late February:
For now, the stock has failed to break out above the prior high from the September. But it could be heading into a sort of “as good as it gets” situation at least from a seasonal standpoint as 45% of their annual sales are expected in the current quarter, their fiscal Q3. When DECK reported their fiscal Q3 in late February, the company issued a strong holiday quarter but guided down for the out quarter and the stock had its worst one day decline in 3 years, down about 12%.
What’s clear from the last couple years’ results is that DECK is no longer the growth darling it once was, as analyst expect high single digit earnings and sales growth in the current fiscal year. DECK trades at about 20x current year’s estimates, which is down significantly from how investors were valuing the shares prior to the Feb guide down:
So here is a big shocker, DECK is in the process of selling a ton of UGGs, and then once we get through the end of January they will sell much less UGGs and then sadly they have to shift their gears to selling a few Teva’s to hippies in Colorado. I suspect that we get a slight re-do of last Jan/Feb.
Wall Street analysts remain fairly mixed on the stock with 14 Buy ratings and 9 Holds, no Sells and an average price target of about $104.50, or about 8% higher. It’s also interesting to note that short interest has been rising to almost 21% of the float, well off of the 52 week lows.
Lastly, options prices remain fairly reasonable with the stock consolidating near the prior highs as realized volatility (how much the stock is moving – white below) is reaching 52 week lows. Implied vol (the price of options – blue below) has just recently picked up, but is still well off of the recent highs:
I don’t have a strong view on the fundamentals, just the seasonal factors I alluded to above. I do think it is worth doing a little work on though. Another failed breakout prior to the company’s fiscal Q3 results, despite that short interest, could make for interesting short entry. Stay tuned.
Disclosure: I was in their NYC Meatpacking District store yesterday with my 9 year old daughter and bought a pair of pink Uggs with a button on the side. Adorbs!