Deckers Outdoor is cheap despite HOKA headwinds
The guest argued that Deckers Outdoor is highly attractive at 12 to 14 times earnings (adjusted for net cash) because international runway and direct-to-consumer margins provide a strong margin of safety.
The argument
The guest noted that while HOKA's North American growth is expected to slow, the brand has significant international expansion potential. Backed by a strong balance sheet with $1.5 billion in net cash, the valuation provides protection even if industry-leading margins contract slightly.
The thesis, stress-tested
✓ What validates it
- ✓Direct-to-consumer sales rising as a percentage of total revenue
- ✓Strong international revenue growth in upcoming quarterly reports
▸ Risks discussed
- ▸HOKA brand growth slowing faster than international expansion can offset
- ▸Severe margin compression if competitive pressures from Swiss rivals or Nike intensify
Hear it yourself
"It's trading a little over a 100 today, maybe one zero eight, one zero nine, but with a billion and a half of net cash on the balance sheet, we bought it at 12 times earnings. So it's pretty clear that the HOKA brand in North America is gonna slow."
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