Deckers Outdoor Corporation (DECK): A Bull Case Theory

We came across a bullish thesis on Deckers Outdoor Corporation on Value investing subreddit by StableBread. In this article, we will summarize the bulls’ thesis on DECK. Deckers Outdoor Corporation's share was trading at $88.03 as of November 28th. DECK’s trailing and forward P/E were 13.08 and 13.99  respectively according to Yahoo Finance.

Deckers Outdoor Corporation, together with its subsidiaries, designs, markets, and distributes footwear, apparel, and accessories for casual lifestyle use and high-performance activities in the United States and internationally. DECK has seen its share price drop more than 58% YTD, falling from $200 to $84, creating what may be a compelling entry point for investors.

The company operates two premium footwear brands, UGG and HOKA, generating $2.5B and $2.2B in revenue respectively, with growth increasingly driven by HOKA. Revenue flows through wholesale (57%) and DTC (43%), with 64% domestic and 36% international exposure.

While U.S. consumer pressures and tariffs have created short-term headwinds, international sales are expanding 38% year-over-year, signaling strong global growth potential. Deckers’ financial profile is robust, with $1.4B cash, zero debt, and $900M+ annual free cash flow, alongside high gross margins expanding from 45% to 58% over the past decade.

The stock’s decline reflects near-term margin pressures from tariffs, seasonal inventory promotions, and a shift toward lower-margin wholesale channels, yet recent Q2 FY2026 results show resilience: revenue up 9.1%, EPS up 14%, and gross margin up 0.3% despite mix shifts. Both HOKA and UGG brands maintain strong demand, with HOKA gaining market share in the U.S. and Europe, and UGG showing strong sell-through. Management is prioritizing brand health over short-term sales, maintaining conservative guidance while absorbing tariffs.

Deckers’ balance sheet and cash flow provide downside protection, with cash and FCF supporting a $73–$74 per share floor. The company also has a $2.2B buyback authorization, enabling meaningful share repurchases at current levels. With international growth, pricing power, and capital allocation optionality, Deckers offers a favorable risk/reward setup, with limited downside and potential upside of 35–60% if consumer conditions stabilize and multiples re-rate. This combination positions $DECK as an attractive opportunity despite near-term pressures.

Previously we covered a bullish thesis on Deckers Outdoor Corporation by Quality Stocks in April 2025, which highlighted growth in UGG and HOKA, buyback strategy, and tariff risks. The company's stock price has depreciated approximately by 14.55% since our coverage. The thesis still stands as the pullback offers a better entry point. StableBread shares a similar perspective but emphasizes updated financials, international growth, and strong cash and free cash flow.

Deckers Outdoor Corporation is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 59 hedge fund portfolios held DECK at the end of the second quarter which was 63 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.