DECK Deckers Brands
At roughly 11x earnings the market assumes HOKA fades; normalized 21% margins still imply about 35% upside.
The story
Deckers is a two-brand footwear company. HOKA is still a share-gaining performance running franchise, and UGG is a mature, highly profitable fashion brand that tends to swing with fashion cycles. Growth is slowing from about 15% a year to high single digits as HOKA matures and tariffs and promotions pressure margins. A net-cash balance sheet and buybacks protect the downside.
Nothing material has changed since the 2026-09-23 take: TTM revenue is $5.53B, the operating margin is 23.8%, and sales-to-capital is 2.21, so all drivers stay the same. The 21% target margin assumes the current ~24% falls back toward branded-footwear economics as tariffs, promotions and HOKA brand investment bite. A 7-year horizon fits a strong brand that is not a durable franchise.
Value drivers
| Revenue growth (Y1) | 7.0% |
| Terminal growth | 3.0% |
| Forecast horizon | 7y |
| Target operating margin | 21.0% |
| Years to target margin | 4 |
| Sales-to-capital | 2.20 |
| Beta | 1.10 |
| Failure probability | 2.0% |
| Cost of capital (WACC) | 10.2% |
| Terminal WACC | 9.7% |
Valuation bridge
| PV of explicit FCFF | 4.78B |
| PV of terminal value | 7.91B |
| Equity value | 14.30B |
| ÷ shares → per share | $105.00 |
Projected free cash flow to the firm
| Yr | Revenue | Growth | Margin | NOPAT | Reinvest | FCFF | PV |
|---|---|---|---|---|---|---|---|
| 1 | 5.91B | 7.0% | 23.1% | 1.06B | 175.87M | 879.36M | 798.07M |
| 2 | 6.29B | 6.3% | 22.4% | 1.09B | 170.26M | 917.67M | 755.83M |
| 3 | 6.65B | 5.7% | 21.7% | 1.11B | 161.98M | 951.52M | 711.26M |
| 4 | 6.98B | 5.0% | 21.0% | 1.13B | 151.03M | 980.29M | 665.01M |
| 5 | 7.28B | 4.3% | 21.0% | 1.18B | 137.43M | 1.04B | 642.08M |
| 6 | 7.55B | 3.7% | 21.0% | 1.22B | 121.33M | 1.10B | 615.90M |
| 7 | 7.77B | 3.0% | 21.0% | 1.26B | 102.91M | 1.16B | 586.92M |
Key risks
- HOKA growth decelerates faster as On, Nike running and Asics compete for shelf space
- UGG fashion cycle rolls over, compressing gross margin through markdowns
- Tariff costs on Vietnam-sourced product squeeze margins below the 21% target
Catalysts
- Holiday quarter UGG sell-through and HOKA international/DTC growth beating lowered guidance
- Continued aggressive buybacks funded by ~$1.9B net cash