Deckers Outdoor Faces Sharp Decline Despite Strong Earnings
Stock Drops Over 18% as Concerns Mount
Shares of Deckers Outdoor Corporation DECK plunged more than 18% in Friday’s trading, following what seemed to be a strong earnings report.
Support Levels and Revenue Performance
If the decline continues, DECK may find support around $182.25, a price point that has demonstrated significance in the past. This makes DECK our Stock of the Day.
During the third quarter, the company reported sales of $1.83 billion, surpassing analysts’ expectations of $1.73 billion.
Earnings also exceeded forecasts, coming in at $3 per share, compared to the expected $2.56. Deckers further raised its full-year earnings guidance to a range of $5.75 to $5.80, up from a previous outlook of $5.15 to $5.25.
Concerns Over Inventory Levels
Despite these positive figures, investor sentiment seems shaky. One of the main worries is a significant increase in inventory, which rose from $474,311,000 to $576,669,000—a jump of over 20%.
High inventory levels can pose challenges for a retailer, as unsold items may lead to price cuts or write-downs in the future, raising long-term concerns for the company.
Should DECK’s price dip to around $182.25, it may halt the sell-off. Historical data suggests that prior resistance levels can shift to support. A look at the chart shows that this price point served as resistance last June, indicating potential stability.
In the past, traders who sold their shares in June may have felt vindicated as prices fell. However, when the stock surged in November, some regretted their decision. Many of these sellers may now seek to buy their shares back, but only if they can do so at previously held prices.
This phenomenon could lead to a buying surge around the $182.00 mark, further reinforcing this level as support, possibly setting the stage for a new upward trend.
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