After a record-breaking rally in 2024 when shares of Deckers Outdoor (DECK +3.69%) soared by 82%, the stock slammed into a brick wall in early 2025 and is now down 53% from its 52-week high as of this writing.
Even as the footwear company posts strong financials, it hasn't escaped the broader stock market turbulence, with concerns about the impact of looming trade tariffs emerging as the latest headwind. Still, investors considering abandoning this footrace might be stepping away too soon.
Here are three reasons Deckers Outdoor could be a great portfolio buy now.
1. A phenomenal growth story
Deckers Outdoor is best known for its footwear brands, including the iconic Ugg sheepskin boots and high-performance Hoka running and athletic shoes. The latter has been a game changer for the company. It is projected to generate over $2 billion in sales this year, more than doubling its size in just three years. Its unique style has driven the success, managing to cross over into the lifestyle category as a fashion phenomenon.
In its fiscal 2025 third quarter (ended Dec. 31), total net sales rose 17.1% year over year, accompanied by a 19% increase in earnings per share (EPS) to a quarterly record of $3. Hoka brand sales were even stronger, surging 24% compared to the prior-year quarter, covering the holiday shopping season. Deckers expects the momentum to continue with an ongoing expansion internationally as a key growth driver.
The results stand in stark contrast with broader industry trends, as competitors like Nike are facing declining sales while blaming weak consumer spending. By this measure, Deckers is gaining market share at rivals' expense.
NYSE: DECK
Key Data Points
Beyond the ups and downs of the stock market, Deckers' fundamentals are solid, with $2.2 billion in cash on its balance sheet cash and zero debt. Investors confident in the company's long-term potential have ample reasons to stick with this industry leader for the long haul.
Image source: Getty Images.
2. Hope for tariff relief from Vietnam
Like most footwear and apparel companies, Deckers depends on overseas manufacturers in China and Vietnam, a setup now strained by the Trump administration's sweeping tariffs: a 10% baseline tax on all U.S. imports, plus higher rates like 46% on Vietnam and 34% on China. Experts predict short-term disruptions from the tariffs -- which the administration has framed as addressing trade imbalances and economic fairness -- as companies such as Deckers are forced to pass their higher costs on to consumers.
Yet, there could be a way for Deckers to escape most of these consequences. In a message posted to social media, President Donald Trump described a "very productive call" with Vietnam's leaders, suggesting open dialogue toward a potential trade deal could be reached, with the possibility of tariffs being reduced to zero. This is key since Deckers, per its 2024 annual report, sources most of its footwear from Vietnam.
While nothing has been confirmed, if tariffs are rolled back sooner rather than later for this crucial Southeast Asian manufacturing hub, it could restore the market's confidence in Deckers' growth, a catalyst for the stock to rebound.
3. A bargain valuation
The sharp decline in the company's stock price since Deckers' last earnings report may be attributed to market concerns that profit margins have peaked, sparking skepticism about the company's ability to sustain its exceptional growth. If macroeconomic conditions worsen, investors face the risk of a sales slowdown that could force a reset of earnings expectations.
Nevertheless, the silver lining of the recent sell-off is that the stock's valuation has fallen to a seeming bargain, trading at just 16 times its estimated full-year EPS as a forward price-to-earnings ratio (P/E). Though uncertainty clouds how earnings will evolve into fiscal 2026, that alone doesn't justify the steep discount to peers like Nike and On Holding, which trade at a forward P/E of 27 and 33, respectively, despite facing similar challenges. Deckers stands out as the value pick in the group.
DECK PE Ratio (Forward) data by YCharts.
Final thoughts
What I like about Deckers Outdoor as an investment is its compelling mix of brand momentum, strong growth, and value that position it to reward shareholders over the long run. I'm bullish and believe the stock represents an excellent buy-the-dip opportunity and could be a great option for diversified portfolios.
