Deckers Outdoor Corporation (NYSE:DECK) is still growing its Hoka and UGG brands, yet its valuation has contracted sharply. The disconnect is not explained by collapsing profitability. In its fiscal first quarter ended June 30, 2026, revenue increased 5.7% to $1.02 billion, gross margin improved and earnings exceeded expectations. Instead, the debate is whether Hoka’s future growth will be sufficient to restore the premium that investors once paid for the footwear company.
Deckers Outdoor Corporation ranks seventh among the 10 best undervalued stocks to buy now according to Reddit, a list spanning consumer, technology, and industrial businesses. But how many of the six higher-ranked stocks combine expanding margins with a balance sheet carrying more cash than debt, and which company secured the most hedge fund support?
The Brands Are Holding Up Better Than the Multiple
For fiscal Q1 2027, Hoka revenue rose about 8% to $704 million and UGG increased roughly 5% to $278 million. Direct-to-consumer sales climbed 13% on the earnings call’s constant-currency framing, helping total gross margin rise 60 basis points to 56.4%. Management attributed the improvement to full-price sales, favorable product mix, and better management of closeouts. Strong direct-channel demand supports the idea that customers are still willing to pay for the brands even as the athletic apparel industry becomes more promotional.
But growth has slowed from the pace associated with Hoka’s earlier expansion. While competitors including Nike face inventory and brand-relevance challenges, newer rivals and changing running-shoe preferences can still pressure Deckers Outdoor Corporation’ pricing. July results did not change its full-year revenue guidance of $5.86 billion to $5.91 billion, and the annual EPS forecast rose only five cents at the midpoint, to $7.35–$7.50. That explains why beating a quarter’s profit estimate did not necessarily persuade investors that the long-run growth profile had materially improved.
There is a useful peer check here. In our Deckers Outdoor Corporation-versus-Crocs comparison, which footwear business has the stronger financing position, and which trades more cheaply against forward profit? The distinction matters because a discount is meaningful only against the earnings durability and leverage that investors are buying.
Margins Can Protect Earnings, But Spending Still Matters
Deckers Outdoor Corporation raised its fiscal 2027 gross-margin outlook to slightly above 56.5% and expects operating margin slightly above 21.5%. Management lifted its assumed tariff rate to 12.5% from 10% while excluding any potential tariff refund from guidance. Those updated assumptions underscore the importance of pricing discipline: higher realized selling prices and fewer closeouts must offset tariffs and freight costs before gross-margin resilience becomes durable earnings expansion.
There is an expense offset, too. Quarterly selling, general, and administrative costs rose 13% to $420 million, faster than revenue, reflecting marketing, global stores, technology, and staffing. Management expects SG&A near 35% of revenue for the year and has pointed to operating leverage from fiscal 2028 onward. In other words, strong gross margins are currently funding investments rather than flowing through entirely as higher near-term operating income. The valuation depends on whether those investments generate enough incremental Hoka sales to improve that equation.
A Much Lower Earnings Multiple Still Needs a Growth Path
According to the Seeking Alpha data, Deckers Outdoor Corporation trades at 11.68 times trailing GAAP earnings and 11.00 times forward GAAP earnings. Forward non-GAAP P/E is 10.99 times, roughly half its five-year average of 22.13 times and below the 14.84-times sector median. Forward enterprise value to EBITDA stands at 7.44 times, compared with the company’s five-year average of 15.32 times. The degree of compression is material, but it does not independently prove that Hoka’s growth expectations are too low.
Consensus shows estimated EPS growth of 7.33% for fiscal 2027, 10.73% for fiscal 2028, 13.36% for fiscal 2029, and 9.86% for fiscal 2030. At the current share price, the associated P/E falls from 10.99 times fiscal 2027 earnings to 9.93 times for fiscal 2028 and 8.76 times for fiscal 2029. That prospective compression relies on continued profit growth. If Hoka slows further or pricing becomes more promotional, a low starting multiple may simply reflect the reduced earnings durability investors anticipate.
Deckers Outdoor Corporation has flexibility that many peers lack. As of June 30 it held about $1.6 billion in cash, inventory was down 5% to $808 million, and management reported no outstanding borrowings. It repurchased roughly $338 million of shares in the quarter, with approximately $4.7 billion left under authorization. Its EPS guide assumes share purchases worth about 80% of projected fiscal-year free cash flow. That can support per-share growth, although repurchases cannot fully substitute for stronger demand. A comparison with Nike’s earnings recovery shows how balance-sheet strength and a low multiple can point to very different operating risks.
The Market Is Still Waiting for the Second Half
BMO Capital initiated coverage on September 8 at Underperform with a $70 target, expressing concern about athletic-footwear promotions and weakening demand. Nike’s own valuation debate offers a contrasting test of what discounted earnings really mean for a global athletic brand. Management, by contrast, expects fiscal 2027 revenue growth to accelerate in the second half as international Hoka wholesale shipments shift later in the year. This makes timing important: a delayed shipment is less damaging than lost demand, but only if orders convert into sales on schedule.
Hedge fund holders declined to 59 from 62 in Q2 2026. Short interest then increased to 11.81 million shares, or 9.74% of the float, as of September 30, from 8.92 million at August-end. The positioning figures are snapshots, not proof that a specific earnings outcome is expected. The latest Nike downgrade shows just how long a brand turnaround can take even after expectations have fallen.
Ultimately, the principal test is whether full-price Hoka demand and the planned second-half shipment acceleration produce sustained double-digit brand growth while preserving the company’s unusually high margins.
READ NEXT: Deckers (DECK) vs Crocs (CROX): Which is a Better Stock to Buy? and BofA Turns Bearish on Nike: What’s Behind the Downgrade?
