Analysis of Deckers Brands 2015

Company: Deckers Brands

ISIN US2435371073 | WKN 894298

Business: An American outdoor and sports shoe producer with focus on niche markets and nice products. Their brands are: UGG, I HEART UGG, Teva, Sanuk, TSUBO, Ahnu, MOZO, and HOKA ONE ONE.

Active: Products are sold in 50 countries and they own themselves 138 stores.

P/E: 17.7

Here you can find the previous analysis of Deckers.

The P/E of Deckers Brands are for me too high with 17.7 and the P/B is also high with 2.9 which gives a clear no go from Graham. The earnings to sales are ok with 9% and the ROE is very good with 16.3%. The book to debt ratio is excellent with 2.4 and at least they do not try to improve their ROE by heavy debt which is good.
In the last six years they have had an excellent yearly growth rate of 14.6%! This then gives us a motivated P/E of 33 to 37 which means that Deckers Brands are undervalued on the market today.
They do not pay any dividend which I do not like.

Conclusion: Graham says no to this company and I do not agree with him this time. To me Deckers Brands look like a very good growth company with a high P/E to follow that growth. The ROE is good, they buy back shares which one could be against based on the P/E but I think it is correct of them. Still I would have liked to see a ROE over 20% for a company that does not pay out any dividends. I could invest in Deckers Brands today but most likely I will not. They do however remain on the Stocks of Interest list. Oh, and the nine months running during 2014 looks ok.

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