Deckers Outdoor Corporation (DECK): A Bull Case Theory

We came across a bullish thesis on Deckers Outdoor Corporation on Louis’s Substack’s Substack by On the Street With Louis. In this article, we will summarize the bulls’ thesis on DECK. Deckers Outdoor Corporation's share was trading at $123.67 as of September 3^rd. DECK’s trailing and forward P/E were 18.88 and 19.88 respectively according to Yahoo Finance.

Deckers Outdoor Corporation has emerged as a standout in the footwear industry, building on the success of its flagship brands UGG and Hoka. Originally designed for ultra-runners, Hoka has now broken into the mainstream, resonating with everyday consumers for its comfort and performance, driving 29.3% sales growth in the first three quarters of 2025 and representing just under 42% of total revenue.

UGG, still the company’s largest brand at just over 54% of revenue, grew 14.9% over the same period, underscoring the breadth of Deckers’ portfolio. This momentum has been fueled by a strategic pivot toward direct-to-consumer (DTC) sales, which now account for over 55% of net sales compared to just 43% through wholesale channels. The DTC model has not only accelerated digital customer acquisition but also meaningfully expanded margins, with gross profit margin rising from 50.3% in 2023 to 60.3% by Q3 2025—a 1000 basis point improvement.

Operational efficiency and financial strength further distinguish Deckers from its peers. The company carries no long-term debt, boasts industry-leading return on invested capital at 32.7%, and manages a significantly faster cash conversion cycle than competitors. Gross margins, which trailed Nike’s a decade ago, have steadily climbed to 60.3%, while net income margins at 25% reflect superior profitability. Despite these achievements, Deckers’ stock has fallen nearly 45% year-to-date, creating a misalignment between fundamentals and valuation.

Based on discounted cash flow analysis, intrinsic value stands at $124 per share, suggesting the market is overlooking the company’s growth trajectory. With iconic brands, expanding digital channels, and exceptional financial discipline, Deckers is positioned to weather macroeconomic headwinds and deliver long-term shareholder value, making current levels a compelling entry point. The author stated in a Reddit post that the March thesis is still valid in the long term as fundamentals remain strong.

Previously, we covered a bullish thesis on Deckers Outdoor Corporation (DECK) by Charts&Companies in May 2025, which highlighted strong fundamentals, brand equity, and attractive valuation metrics. The company’s stock price has appreciated approximately 2% since our coverage. On the Street With Louis shares a similar view but emphasizes accelerated DTC growth and margin expansion.

Deckers Outdoor Corporation is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 63 hedge fund portfolios held DECK at the end of the first quarter which was 66 in the previous quarter. While we acknowledge the potential of DECK as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.