Investment Thesis
Deckers demonstrates exceptional fundamental quality with elite profitability metrics (57.7% gross margin, 23.1% operating margin, 18.7% net margin), a fortress balance sheet with zero debt and $1.9B cash, and outstanding capital efficiency (41% ROE, 27.8% ROA). The company generates $1.1B in free cash flow on $5.5B revenue with 9.8% YoY growth, demonstrating both scale and sustainable returns.
Strengths
- Exceptional profitability: 57.7% gross margin, 23.1% operating margin, 18.7% net margin - among best-in-class
- Zero debt with fortress balance sheet: $1.9B cash, 3.54x current ratio, 0.00x debt/equity ratio
- Outstanding capital efficiency: 41% ROE, 27.8% ROA with 20.1% free cash flow margin
- Strong cash generation: $1.1B operating cash flow, $1.1B free cash flow with minimal capex intensity
- Solid growth profile: 9.8% revenue growth and 10.9% EPS growth
Risks
- Revenue growth (9.8%) outpacing net income growth (6.0%) - potential margin compression or operating cost escalation despite strong absolute margins
- Consumer discretionary exposure - footwear/apparel sector vulnerable to economic downturns and shifting consumer preferences
- Elevated insider trading activity (17 Form 4 filings in 90 days) - transactions warrant monitoring for directional signals
Key Metrics to Watch
- Gross margin trend - maintaining above 57% critical to investment thesis
- Operating margin sustainability - monitor for compression below 22%
- Free cash flow growth - should track with revenue growth going forward
- Revenue growth acceleration - current 9.8% should maintain or improve
Financial Metrics
Revenue
5.5B
Net Income
1.0B
EPS (Diluted)
$7.02
Free Cash Flow
1.1B
Total Assets
3.7B
Cash
1.9B
Profitability Ratios
Gross Margin
57.7%
Operating Margin
23.1%
Net Margin
18.7%
ROE
41.0%
ROA
27.8%
FCF Margin
20.1%
Balance Sheet & Liquidity
Current Ratio
3.54x
Quick Ratio
2.94x
Debt/Equity
0.00x
Debt/Assets
0.0%
Interest Coverage
N/A
Long-term Debt
N/A
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-23T08:11:17.179960 |
Data as of: 2026-03-31 |
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