Deckers Outdoor (DECK) has long outperformed the S&P 500 (SPX), posting a 588% gain over the past five years (compared to 90% for the SPX over the same period). The footwear company is also up 42% year-to-date and seems poised for a solid run. The company’s rapid growth relative to competitors (which means increasing market share) and strong financials make it a stock that can continue to outperform. Plus, it may get additional momentum from an upcoming stock split. So I’m bullish on DECK stock.

Deckers Outdoor is gaining momentum

Deckers Outdoor reported promising earnings for the start of fiscal 2025. Revenue rose 22% year-over-year to $825.3 million, while net income rose 82% year-over-year. Good earnings reports like this one are bound to attract attention, and a P/E ratio of 30 makes the stock seem reasonable, especially with expanding profit margins.

HOKA, which sells running shoes and athletic apparel, accounted for more than half of Deckers Outdoor’s total revenue in the first quarter of fiscal 2025 and was one of its fastest-growing segments. HOKA’s revenue increased 29.7% year over year in the quarter as the company continued to gain market share over its competitors. Deckers Outdoor also has UGG, Teva and other brands under its corporate umbrella.

The competition is waning

The company’s earnings report is even better when you consider the context. Most of Deckers Outdoor’s competitors aren’t as successful, especially the giants of the industry. Nike (NKE) reported a year-over-year decline in revenue in the fourth quarter of fiscal 2024. The iconic company’s total revenue grew just 1% year-over-year for the full fiscal 2024.

Nike isn’t the only competitor losing ground to Deckers Outdoor. Adidas (ADDYY) and Lululemon (LULU) both reported positive sales growth, but their growth rates pale in comparison to Deckers Outdoor.

This contrast is important for investors to track. It suggests that Deckers Outdoor is gaining more and more customers. If Deckers Outdoor continues to gain market share, it can become one of the market leaders in the footwear industry.

The Sanuk sale creates more time and capital

Most of Deckers Outdoor’s brands continue to grow year after year, but there are two exceptions. Teva’s sales declined 4.3% year over year, resulting in total sales of $46.3 million. The low growth rate is manageable and easier to recover from, but the same cannot be said for Sanuk.

Deckers Outdoor reported that net sales of the Sanuk brand decreased 28.4% year over year. Fortunately, $6.8 million is only a small portion of total sales, but Deckers Outdoor recently decided to sell the company to Lolë Brands. This is a smart move that frees up Deckers Outdoor’s time and capital to focus on other initiatives.

Even if Lolë Brands can get Sanuk back on track for growth, it is clear that Deckers Outdoor was not up to the task. Now the company can focus on its successful brands like HOKA, UGG and its smaller businesses.

The “Other Brands” segment is also gaining momentum

HOKA sales are the main story in any Deckers Outdoor earnings report, but the Other Brands segment is also encouraging. This division of Deckers Outdoor grew 123.5% year-over-year to $4 million, driven primarily by Koolaburra net sales.

The sale of Sanuk will allow Deckers Outdoor to focus on these brands and potentially maintain high growth for several years. While other brands represent only a small portion of total sales (less than 1%), this share could become significant if HOKA sales decline significantly.

An upcoming stock split can bring more attention to the stock

The trend for stock splits remains strong this year, and Deckers Outdoor is one of them. Management has announced a 6-for-1 stock split that will take effect on September 9. The stock split makes sense because Deckers Outdoor previously traded for over $1,000 per share.

While stock splits don’t increase a company’s intrinsic value, they do attract more attention. Deckers Outdoor benefited from the extra attention it received when it became a member of the S&P 500 earlier this year, so the same thing can happen with the stock split.

Is Deckers Outdoor stock a buy according to analysts?

Deckers Outdoor is currently rated as a strong buy on TipRanks based on 12 buy recommendations and four hold recommendations from analysts over the past three months. The average price target for DECK shares of $1,081.57 implies a 13.8% upside potential from current levels, but some analysts are more optimistic than others. The highest price target of $1,350 means the stock can rise another 42%.

View more DECK analyst ratings

The conclusion on Deckers Outdoor shares

Deckers Outdoor has the opportunity to generate significant returns for long-term investors. The company continues to post impressive revenue and net income growth while its competitors are slowing down. Some competitors are trying to maintain their market share while others are losing ground.

In particular, Nike’s declining sales represent an opportunity for Deckers Outdoor and other competitors. Deckers Outdoor is indeed well positioned to capitalize on this given its attractive valuation and the robust growth rates of its brands such as HOKA, UGG and others. In addition, the sale of Sanuk should give the company more time and capital to pursue growth opportunities.

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