On Monday came a Bloomberg report that Deckers Outdoor is seen as luring buyers. The report cites Jefferies saying that the huge discount on the shares has made it more attractive of a candidate which is trading at just over 8-times earnings. Bloomberg pointed out that this was the cheapest valuation of any footwear and accessories. Then the report shows a Wedbush commentary followed by another with a magic $50 potential buyout price.
Our take has a different bend to it. Many shareholders were absolutely crushed chasing this trend of UGGs shoes and Teva sandals. The raw market cap of just over $1.2 billion in not an issue. What is an issue is that the gain of more than 5% to $34.85 still compares to a 52-week range of $28.53 to $109.98. Even if a buyout offer came at $50.00 per share, there are too many buried holders who are long and wrong here. Law suits would instantly surface with claims that Deckers is selling itself off for half the value of just a year ago due what may largely be a weather-sales related issue.
Deckers is cheap if you just consider that Thomson Reuters has consensus estimates of $3.36 EPS this year and $3.77 EPS next year. Even the revenue expectations of $1.43 billion in 2012 and $1.49 billion are cheap. There is a seasonality issue that exists here at this company, so it is without surprise that it has to trade at a discount to peers. Seeking Alpha has noted the possibility of a takeover before as well.
The long and short of the argument is that even if there is hope and value here, Deckers Outdoor would have to fetch far more than its current price today and far more than that $50 implied buyout price to keep shareholders from storming the corporate headquarters here.
JON C. OGG
Are You Still Paying With a Debit Card?
The average American spends $17,274 on debit cards a year, and it’s a HUGE mistake. First, debit cards don’t have the same fraud protections as credit cards. Once your money is gone, it’s gone. But more importantly you can actually get something back from this spending every time you swipe.
Issuers are handing out wild bonuses right now. With some you can earn up to 5% back on every purchase. That’s like getting a 5% discount on everything you buy!
Our top pick is kind of hard to imagine. Not only does it pay up to 5% back, it also includes a $200 cash back reward in the first six months, a 0% intro APR, and…. $0 annual fee. It’s quite literally free money for any one that uses a card regularly. Click here to learn more!
Flywheel Publishing has partnered with CardRatings to provide coverage of credit card products. Flywheel Publishing and CardRatings may receive a commission from card issuers.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.
You can follow him investing $500,000 of his own money on our top AI stocks for free.