Nike (NKE -0.40%) is a popular stock to buy on Wall Street. It's the largest footwear brand in the world, but that doesn't mean it's the absolute best stock to buy in the athletic-wear market. The shares have fallen 44% year to date over worries about slowing consumer demand.

Meanwhile, Deckers Outdoor (DECK 1.49%) has significantly outperformed Nike and the broader market, with its stock price little changed this year, as the company's financials have remained quite strong despite the economic headwinds. 

Deckers has a lot going for it. While Nike has an iconic brand that gives investors a high degree of certainty about future growth, Deckers has delivered stellar returns to shareholders for a long time based on its ability to build strong offerings like Ugg and Hoka.

Here are three reasons I would buy Deckers over Nike right now.

1. Hoka is growing into a multibillion-dollar brand

Nike has been designing running shoes since the 1970s, and it is quite good at marketing those products. The company has grown from a small business into a giant global brand generating nearly $30 billion in annual footwear sales alone. The swoosh brand prides itself on innovation, but Deckers is proving it can compete with the best.

Hoka is on pace to cross $1 billion in annual sales this year after posting 56% growth last year. Sky-high inflation hasn't stopped its momentum. In the fiscal second quarter ended Sept. 30, Hoka sales grew 58% year over year. 

Deckers owns four brands. Ugg is the largest, accounting for 54% of total sales, followed by Hoka at 38%. Smaller brands Teva and Sanuk make up the rest. Ugg is performing well, with sales up 6% last quarter, but management sees Hoka growing into a multibillion-dollar brand over the long term.  

2. Deckers is growing faster than Nike

Footwear sales account for about two-thirds of Nike's business, with apparel and sports equipment making up the balance. But Nike's large size is an anchor on its growth compared to the smaller and more nimble Deckers Outdoor.

In the most recent quarter, Nike said global sales of footwear were up 12% year over year on a constant currency basis. However, because most of Nike's revenue is sourced from overseas markets, the rising U.S. dollar has been a headwind for growth. When including the impact of currency fluctuation on Nike's financials, reported revenue only rose 5%.

Strong demand for Hoka boosted Deckers' total sales by 21% through the first half of the year. The shoe specialist generates a small portion of sales from overseas markets, so foreign currency fluctuation isn't pressuring Deckers as much as Nike.

The success of Hoka has made Deckers a more diversified and stronger business. The acquisition of Hoka in 2012 helped shift the company's sales away from the dependency on the fashion-leaning Ugg brand. Since the purchase of Hoka 10 years ago, Deckers has more than doubled sales, outpacing Nike's top-line growth.

NKE Revenue (TTM) Chart

Data by YCharts

3. Deckers' valuation is lower

Considering Deckers' superior record of growth, it's no surprise that the stock has outperformed Nike this year. Most importantly, Deckers is delivering profitable growth. Analysts expect Deckers to increase earnings per share at an annualized rate of 16% over the next five years, compared to 6.5% for Nike. 

Investors can buy a superior record of revenue and earnings growth for a much cheaper price. Deckers' price-to-earnings (P/E) ratio is currently 20 based on this year's earnings estimates. That is a much better value than Nike's forward P/E of 31.

NKE PE Ratio (Forward) Chart

Data by YCharts

The best reason to invest in Nike is its brand power, which leads to consistent sales every year, but investors are being asked to pay a rich price to own a piece of that prestigious brand. This status has pushed Nike's P/E much higher than underlying growth would warrant, especially when compared to the faster-growing Hoka owner. 

Deckers is an under-the-radar stock that seems to be perpetually undervalued by the market. A $10,000 investment in the stock in 2005 would be worth $375,000 today. The same investment that year in Nike now would be worth less than a quarter of that amount. Nike's shoes win on style, but Hoka's popular Bondi running shoe line is clearly winning over consumers for its comfortable cushioning technology.

Deckers now has two strong brands in Ugg and Hoka to drive growth. The stock offers more bang for the buck and is the better buy.