The U.S. stock market has hit a rough patch. While there's been a lot of volatility, the S&P 500 lost 0.7% in 2025 through May 22. Growth stocks, measured by the S&P 500 Growth Index, have increased a tepid 0.6%.
Deckers Outdoor's (DECK -19.88%) shares have performed much worse than those two benchmarks. They're down nearly 38% since the start of 2025.
Of course, that doesn't mean the stock has become a bargain. But it does warrant a look from long-term investors to see if the company's fundamentals remain sound. Once you do, I think you'll find purchasing the shares makes a lot of sense.
Image source: Getty Images.
Growing sales
Deckers Outdoor sells footwear and apparel under several brands. However, its two most well-known and popular, UGG and HOKA, account for most of the company's sales.
HOKA continues to resonate with shoppers who remain drawn to the shoe's unique features and comfortable fit. The proof is in the sales figures. Fiscal fourth-quarter sales increased 10% to $586.1 million. This caps off a year in which the product's sales rose 23.6% to $2.2 billion. Decker's fiscal year ended on March 31.
Its other major product, UGG, has built a loyal customer base due to the shoes' comfort and style. The product's quarterly sales growth slowed, increasing 3.6% to $374.3 million. It's something to keep an eye on, but I'm not too concerned by one quarter of slower growth. Sales reached $2.5 billion for the year, up 13.1%.
Q4's total sales grew by 6.5% to over $1 billion. However, it was 7.5% after removing foreign currency translation effects. And Deckers Outdoor continued to increase profitability, which was $1.00 per diluted share compared to $0.82 a year ago.
Weathering higher tariffs
Certainly, the U.S. and other countries implementing tariffs have created uncertainty for many consumer goods companies. Deckers Outdoor is no exception.
Given the rapidly changing policies, management didn't give yearly guidance. However, it did provide a Q1 outlook.
The company expects the period's sales to come in at $890 million to $910 million. That's an increase of 8% to 10% from last year's $825.3 million.
It may not sound great, but this comes during challenging times. Consumers, already facing higher prices, may see their wallets further strained by the effects of higher tariffs. Deckers' growth should pick up when the economy returns to a more solid footing.
Better valuation
Deckers' stock price drop has created a better valuation. Its shares sell at a price-to-earnings (P/E) ratio of 20, down from over 32 at the end of 2024. It's also cheaper than the overall stock market, with the S&P 500 selling at a P/E multiple of 28.
There's a reason the stock has sold off and trades at a cheaper valuation, of course. The company has entered a period of near-term uncertainty given the big economic picture. Last quarter's sales aren't likely to alleviate those concerns.
Certainly, purchasing Deckers' shares presents risks. However, management has proven adept at producing innovative products, and I think they'll continue doing so. It's why short-term hiccups can create buying opportunities.
That's the key to long-term success, and why I think Deckers shares are compelling at this valuation.
