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Deckers Outdoor Corporation (DECK) Is Water-Logged And Getting Wetter Today

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Deckers Outdoor Corporation ( DECK) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Deckers Outdoor Corporation as such a stock due to the following factors:

  • DECK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $82.8 million.
  • DECK has traded 1.1 million shares today.
  • DECK traded in a range 220.8% of the normal price range with a price range of $5.39.
  • DECK traded below its daily resistance level (quality: 25 days, meaning that the stock is crossing a resistance level set by the last 25 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on DECK:

Deckers Outdoor Corporation engages in the design, manufacture, and marketing of footwear and accessories for outdoor activities and casual lifestyle use for men, women, and children in the United States and internationally. DECK has a PE ratio of 31.9. Currently there are 7 analysts that rate Deckers Outdoor Corporation a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Deckers Outdoor Corporation has been 1.4 million shares per day over the past 30 days. Deckers Outdoor has a market cap of $3.1 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 0.76 and a short float of 22.8% with 7.50 days to cover. Shares are up 1% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Deckers Outdoor Corporation as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • Compared to its closing price of one year ago, DECK's share price has jumped by 143.93%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, DECK should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • DECK's revenue growth trails the industry average of 18.6%. Since the same quarter one year prior, revenues slightly increased by 2.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to -$158.04 million or 26.13% when compared to the same quarter last year. In addition, DECKERS OUTDOOR CORP has also vastly surpassed the industry average cash flow growth rate of -35.98%.
  • 45.63% is the gross profit margin for DECKERS OUTDOOR CORP which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 8.54% trails the industry average.
  • DECKERS OUTDOOR CORP's earnings per share declined by 19.5% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, DECKERS OUTDOOR CORP reported lower earnings of $3.62 versus $5.07 in the prior year. This year, the market expects an improvement in earnings ($3.91 versus $3.62).

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