Last update on 2024-06-07

Deckers Outdoor (DECK) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

Deckers Outdoor (DECK) achieves a Piotroski F-Score of 7/9 in 2023, signaling strong financial health and operational efficiency.

Short Analysis - Piotroski Score: 7

We're running Deckers Outdoor (DECK) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Based on the Piotroski F-Score analysis, Deckers Outdoor (DECK) has a strong financial position with a score of 7 out of 9. They have shown consistent positive net income and operational efficiency, with a significant cash flow from operations. Their return on assets is positive, and the company has been generating enough cash flow to cover its net income. Deckers Outdoor's liquidity has also improved, with an increase in its current ratio. However, there was a slight increase in their financial leverage, which is not ideal. On the bright side, the company has reduced its number of outstanding shares, signaling a potential share buyback strategy and management's confidence in the company's future. Unfortunately, there was a slight decline in gross margin, although it remains above the industry median. Lastly, the company's asset turnover ratio has improved, indicating better utilization of assets to generate revenue.

Insights for Value Investors Seeking Stable Income

Overall, Deckers Outdoor (DECK) appears to be a strong contender for investment with a Piotroski F-Score of 7. The company demonstrates strong financial health, good cash flow, and improving efficiency. While the slight increase in leverage and decline in gross margin may be concerning, the positives seem to outweigh the negatives. It could be worth looking into this stock further as a potentially good investment.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Deckers Outdoor (DECK)

Company has a positive net income?

Net income is a measure of profitability that indicates whether a company is making a profit or loss over a period of time.

For the fiscal year 2023, Deckers Outdoor (DECK) reported a net income of $516,822,000. This is a positive figure, so according to the Piotroski scoring method, we add 1 point. Analyzing further, it's noteworthy that DECK has shown consistent positive net income for the past two decades, barring 2017's dip to $5,710,000. This sustained profitability trend is indicative of strong financial health and operational efficiency for the company.

Company has a positive cash flow?

The criterion examines whether a company's Cash Flow from Operations (CFO) is positive.

The Cash Flow from Operations (CFO) for Deckers Outdoor (DECK) in 2023 is $537,422,000, which is positive. This is a crucial indicator, highlighting that DECK generated substantial cash flow from its core business activities, which is a positive sign for financial health. Historically, DECK has shown a general positive trend in CFO, with values consistently positive over the last 20 years, even peaking in some years like 2021. The CFO in 2023 marks a significant increase compared to some previous years, particularly 2022 ($172,353,000), indicating improved operational efficiency and profitability. Overall, this positive trend in CFO is favorable and warrants adding 1 point for this criterion.

Return on Assets (ROA) are growing?

Explain the criterion for Deckers Outdoor (DECK) and why it is important to consider

Return on Assets (ROA) measures how efficiently a company uses its assets to generate profit. By comparing the ROA, investors can gauge management's performance in using company assets. A rising ROA is a strong signal of improved management efficiency which contributes to higher profitability.

Operating Cashflow are higher than Netincome?

This criterion assesses whether the company's operating cash flow exceeds its net income.

For the financial year 2023, Deckers Outdoor (DECK) reported an operating cash flow of $537.42 million and a net income of $516.82 million. Since the operating cash flow ($537.42 million) is higher than the net income ($516.82 million), this criterion scores 1 point. This trend is positive as it indicates that Deckers is generating sufficient cash from operations to cover its net income, suggesting high-quality earnings. Over the past 20 years, DECK's operating cash flow has generally demonstrated a steady increase, which further supports the stability and robustness of the company's cash-generating capabilities.

Liquidity of Deckers Outdoor (DECK)

Leverage is declining?

Change in Leverage refers to the variation in the company's financial leverage, measured by comparing its debt-to-equity ratios over different periods. A decrease in leverage is generally preferable.

The leverage for Deckers Outdoor increased from 0.0737 in 2022 to 0.0766 in 2023, indicating an uptick by 0.0029 points. This change implies a higher degree of gearing for the company, which could indicate a marginal increase in financial risk. Over the past 20 years, Deckers Outdoor has seen varying leverage, peaking at 0.2865 in 2003 and maintaining significantly lower gearing levels since 2005. Despite the recent uptick, the leverage is still considerably lower compared to historical values, suggesting a conservative approach to financing but not favorable in this specific Piotroski criterion, thus scoring 0 points.

Current Ratio is growing?

The Change in Current Ratio criterion evaluates the company's ability to meet its short-term liabilities with its short-term assets, comparing the change year-over-year.

In 2023, Deckers Outdoor (DECK) has a current ratio of 3.8406, up from 3.2346 in 2022. This increase signifies an enhanced capability to cover short-term liabilities, leading to a positive score of 1 point for the criterion. Comparing a 20-year trend of the current ratio, DECK’s ratio has generally exceeded the industry median, reflecting sound short-term financial health and prudent liquidity management. Thus, the year-over-year rise in the current ratio is a healthy trend.

Number of shares not diluted?

Shares outstanding is an important metric as it represents the total number of shares that are currently owned by shareholders. It can affect earnings per share (EPS), ownership dilution, and overall market capitalization of the company.

Comparing Deckers Outdoor's outstanding shares, we see a decrease from 27,508,000 shares in 2022 to 26,504,000 shares in 2023. This indicates a reduction, earning a score of 1 for this criterion. This trend is favorable as it suggests that the company may be buying back its shares, which can be a potential sign of management's confidence in the company's future performance. It also benefits existing shareholders through reduced dilution and potentially higher EPS: Over the past 20 years, there is a clear downtrend in outstanding shares, with a gradual reduction from 29,418,000 in 2003 to 26,504,000 in 2023. This long-term decrease bolsters the positive outlook on shares repurchase strategies.

Operating of Deckers Outdoor (DECK)

Cross Margin is growing?

This criterion assesses whether Deckers Outdoor's gross margin, a measure of profitability, has improved year-over-year.

Analyzing the provided data, Deckers Outdoor's gross margin for 2023 stands at 0.5032, slightly down from the 0.5103 recorded in 2022. This marks a decrease in gross margin, leading to a score of 0 for this criterion. Despite the slight decline, it's important to note that DECK's gross margins are still substantially above the industry median, which has oscillated around the mid-40% range over the past two decades. For instance, in 2023, the industry median gross margin was 0.4422. DECK's historical gross margins have routinely outpaced the industry median, evidencing efficient operational management and pricing strategies. However, this recent year-over-year decline could signal emerging pressures or inefficiencies that warrant closer examination. Deckers Outdoor should aim to identify and address the underlying causes to sustain their competitive edge.

Asset Turnover Ratio is growing?

Asset Turnover measures a company’s effectiveness in utilizing its assets to generate sales. It is crucial in assessing operational efficiency and profitability.

For Deckers Outdoor Corporation (DECK), the Asset Turnover ratio increased from 1.4002 in 2022 to 1.484 in 2023, earning an additional point according to the Piotroski Score methodology. This positive trend signifies improved efficiency in using its assets to generate revenue. Historically, Deckers has fluctuated in its Asset Turnover ratio, peaking at 1.6151 in 2009. The recent increase hints at a favorable operational trend which bodes well for stakeholders.