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Deckers tumbled earlier this year, but the company is still delivering solid growth.
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It now trades at a substantial discount to the S&P 500.
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The company expects to take a $185 million hit from tariffs.
With stocks trading near all-time highs, it may seem like almost every growth stock is too expensive. After all, growth stocks have driven the bull market over the last 2.5 years, and it’s not just artificial intelligence stocks, as plenty of others have soared during that time.
In the consumer sector, stocks like Costco and Walmart have soared, helping to drive the S&P 500 to above 6,500.
However, there are some growth stocks trading at a discount, and one of them looks like an excellent buy right now. That’s Deckers Outdoor (NYSE: DECK), the maker of Hoka running shoes and Ugg sheepskin boots.
Deckers is currently trading down 46% from its peak earlier this year as fears around tariffs and slowing growth have weighed on the stock. However, those fears now seem to be overblown following better-than-expected results in its first-quarter earnings report and a cooling off of the tariff situation.
An attractive valuation and promising growth prospects make Deckers a great stock to buy with $1,000, which can get you eight shares of it currently. Keep reading to see why.
After a pair of disappointing earnings reports, Deckers stock fell more than 50% from its peak in January, and the stock now trades at a price-to-earnings ratio of 19, a significant discount to the S&P 500, which now trades at a P/E of 27, nearly 50% more.
Deckers’ growth also appears to be outpacing that of the S&P 500, as revenue rose 16.9% to $964.5 million, which was well ahead of estimates of $900.4 million.
That growth was balanced across its two core brands with Hoka sales up 19.8% to $653.1 million and Ugg sales up 18.9% to $265.1 million.
While domestic sales were weak in the quarter, down 2.8% in the quarter to $501.3 million, international sales soared 49.7% to $463.3 million, showing the company is tapping new markets abroad even as it faces pressure from tariffs and weak discretionary spending at home. The international growth was driven by Europe and China, as the company is expanding its distribution in Europe.
Looking ahead to the rest of the year, management expects solid growth from its two core brands, calling for mid-teens guidance for Hoka and mid-single-digit growth for Ugg.
In addition to the attractive valuation and momentum in the international market, Deckers also has one of the strongest track records in the apparel and footwear sector, as the stocdk is up more than 1,000% over the last decade, even after the recent sell-off.
