Deckers Outdoor Surpasses Nike: A New Leader in Footwear Investment
The sneaker and shoe market is intensely competitive, with Nike having been a dominant player for decades. Although Nike remains the largest worldwide sporting shoe and apparel company, it may not be the top stock option in that space anymore.
Deckers Outdoor (NYSE: DECK) has seen a remarkable 400% growth over the past five years, while Nike’s stock has declined by 32% in that time.
Market Performance and Investor Concerns
Deckers Outdoor’s rise hasn’t been consistent. After the last earnings announcement, the stock experienced a decline, causing shareholders to await the upcoming first-quarter results expected after market close on May 22.
Nonetheless, Deckers remains a compelling growth stock for those looking to invest $1,000 today.
Competitive Edge and Brand Portfolio
Deckers Outdoor owns a variety of well-known brands, including UGG, Koolaburra by UGG, HOKA, Teva, and Ahnu.
Image source: Getty Images
Since the onset of the COVID-19 pandemic, Deckers has performed notably well. Many consumer-focused companies, including Nike, briefly benefitted from economic stimulus efforts. While inflation and waning consumer spending have negatively impacted Nike, Deckers has continued to grow. Analysts anticipate sales will reach $6 billion next year.
Data by YCharts.
The company’s reliable success indicates that its brands resonate with consumers. Additionally, Deckers generated $1 billion in free cash flow over the past year, constituting over 20% of its sales—nearly double the free cash flow margin of Nike, despite Nike’s advantages in scale and typical profit margins.
Upcoming Earnings: Will Growth Continue?
Despite concerns stemming from its previous earnings report, which caused a decline in stock price, Deckers had a strong quarter, exceeding revenue and earnings expectations. The management team also raised its guidance for full-year revenue.
This demonstrates that market reactions can be unpredictable. Investors adopting a long-term perspective may find that current price volatility has limited impact compared to the company’s robust growth outlook moving forward.
Additionally, Deckers Outdoor has no long-term debt and maintains $2.2 billion in cash, providing solid flexibility for business investments.
Factors Favoring Investment in Deckers Outdoor
Before the January earnings report, Deckers had a P/E ratio exceeding 36. Such a premium attaches high expectations, which likely influenced the bearish market response despite strong quarterly performance.
Currently, Deckers Outdoor’s P/E ratio sits at just 21. In comparison, the S&P 500 trades at 24 times earnings. Analysts project Deckers’ earnings will grow at an average annual rate of 15% over the next five years, making it an appealing option, especially as it trades below the market average.
Is Now the Right Time to Invest $1,000 in Deckers Outdoor?
Before investing in Deckers Outdoor, consider the following:
The Motley Fool Stock Advisor analyst team has identified what they believe are the current top 10 stocks for investors, and Deckers Outdoor was not included in this list. The selected stocks could yield significant returns in the coming years.
Consider past recommendations: when Netflix made this list on December 17, 2004, a $1,000 investment would now be worth $642,582!
Similarly, Nvidia appeared on the list on April 15, 2005, and a $1,000 investment then would now be valued at $829,879!
*Stock Advisor returns as of May 19, 2025.
Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Deckers Outdoor and Nike. The Motley Fool has a disclosure policy.
The views expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
