Trevor Scott
Founder & Portfolio Manager of Tidefall Capital Management
Deckers looks like a classic value trap despite multi-year-low valuations, because its margins and returns on capital sit at cyclical peaks. EBITDA margin is 24% versus 12-19% in 2013-2019, and growth has fallen from 15-18% in 2023-2025 to just 7% in 2026. Beyond management guidance, there is little basis for confidence that its brands aren't peaking in a sector where future results are hard to call. x.com x.com x.com x.comÂ
Deckers' lowered FY27 revenue guidance adds evidence of slowing growth behind the value-trap concern. Guidance is now $5.70B-$5.725B, down from $5.86B-$5.91B and below the $5.88B estimate; the stock trades at about 10 times next-twelve-month earnings. x.comÂ
Deckers looks exposed to sector-wide discounting, as a struggling Nike is about to drag down the whole footwear sector with promotions. The lowest Street price target on Deckers was cut to $70, a bad sign, since an analyst is unlikely to turn bearish without good information. x.com x.comÂ
Deckers Outdoor is a decent safety play as a very profitable business trading at a low multiple, now with a buyback authorization of up to 33% of its market cap. Growth was somewhat slower than expected and guidance is mediocre, but a return to growth could make the stock jump. x.comÂ
Deckers, Nike and Crocs are too hard to own as buy-and-hold investments because fashion needs constant babysitting, and there are easier ways to make money. That holds even as @teechongyen notes Deckers has been shrinking its share count with rising free cash flow and trades at about 12.5x forward earnings. x.comÂ
On Holding is the better business to own: when you can pay a few more turns of valuation for higher growth, don't think twice. Deckers, which Michael Burry killed, is the contrast. x.comÂ
Deckers Outdoor is the pick among beaten-down athletic brands, as it is likely buying back 5-10% of its float at these levels. x.comÂ
Nike's brand concerns look priced in; stabilization, not sudden revenue acceleration, is what the speculative long needs. A few good campaigns and a return to large stores could help, though China consumers will be a drag. Short-term EPS is a poor indicator, and customers may return after trying other brands. x.com x.comÂ
Nike's business is just not getting better: its products are too pricey and revenue has been flat for five years. Quarterly revenue of $11.21 billion missed the $11.33 billion estimate, EPS slipped to $0.48 from $0.49 a year earlier, and the company lowered its outlook to single-digit growth in 2027. x.com x.com x.comÂ
Netflix, Microsoft, AppLovin, Broadcom, Deckers, Adobe and The Trade Desk look disconnected from their earnings growth, which Bill Ackman says share prices ultimately follow. Over the past year Netflix earnings rose 35% while the stock fell 44%; Microsoft earnings rose 29.8%, stock down 22.8%; AppLovin 110% vs. up 15%; Broadcom 125% vs. up 28%; Deckers 11% vs. up 1%; Adobe 11.8% vs. down 35%; The Trade Desk 9% vs. down 76%. x.com x.com x.com x.com x.com x.com x.comÂ
Lululemon, Nike, Under Armour and On look like cursed value traps because rising competition and unpredictable fashion trends keep eroding their positions. Lululemon has lost its niche dominance as the luxury standard and is now one of a dozen rivals, such as Vuori, Alo and Athleta, chasing the same buyers. Lululemon sits at six-year lows, Nike at 12-year lows, Under Armour at all-time lows and On back at 2022 levels. The products may still be good, but competition is overwhelming. x.com x.com … Show more