Deckers has been treading water for the past six months, recording a small return of 4.1% while holding steady at $159.53. The stock also fell short of the S&P 500’s 12.2% gain during that period.
Given the weaker price action, is now a good time to buy DECK? Or should investors expect a bumpy road ahead? Find out in our full research report, it’s free.
Why Is Deckers a Good Business?
Established in 1973, Deckers (NYSE: DECK) is a footwear and apparel conglomerate with a portfolio of lifestyle and performance brands.
1. Long-Term Revenue Growth Shows Strong Momentum
A company’s long-term performance is an indicator of its overall quality. While any business can experience short-term success, top-performing ones enjoy sustained growth for years. Over the last five years, Deckers grew its sales at a solid 18% compounded annual growth rate. Its growth beat the average consumer discretionary company and shows its offerings resonate with customers. 
2. Projected Free Cash Flow Gains to Pump Profits
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
Over the next year, analysts predict Deckers’s cash conversion will improve. Their consensus estimates imply its free cash flow margin of 20.4% for the last 12 months will increase to 23%, giving it more flexibility for investments, share buybacks, and dividends.
3. New Investments Bear Fruit as ROIC Jumps
ROIC, or return on invested capital, is a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).
We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Deckers’s ROIC has increased significantly over the last few years. This is a great sign when paired with its already strong returns. It could suggest its competitive advantage or profitable growth opportunities are expanding.
Final Judgment
These are just a few reasons why we think Deckers is a great business. With its shares trailing the market in recent months, the stock trades at 24.9× forward price-to-earnings (or $159.53 per share). Is now a good time to initiate a position? See for yourself in our in-depth research report, it’s free.
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