3 Compelling Reasons to Consider Investing in Deckers (DECK)

Investors are often drawn to growth stocks for their ability to surpass market expectations and generate impressive returns. Deckers (DECK), a company known for its popular Ugg footwear, stands out as a growth stock not to be overlooked. Nevertheless, pinpointing a successful growth stock can be challenging since such stocks typically exhibit higher risk and volatility. Betting on a growth stock nearing the end of its expansion phase can result in considerable financial loss.

Earnings Growth: The Hallmark of Potential

Earnings growth is perhaps the most crucial indicator of a stock's potential, particularly for growth investors. Stocks that demonstrate a sharp rise in earnings are more likely to grab investor attention. Deckers shines in this aspect with an historical earnings per share (EPS) growth rate of 24.6%. What is more important for investors to consider is the projected EPS growth, which is an impressive 38.6% for this year, substantially outpacing the industry average of 19.5%.

Cash Flow Growth: Fuel for Expansion

The growth of a company's cash flow is a key factor for growth-focused stocks because it allows for funding new initiatives without incurring debt. Deckers exhibits robust cash flow growth with an 11.4% year-over-year increase, significantly outstripping the industry's average decline of 24.7%. When considering Deckers' annualized cash flow growth rate of 18.9% over the past three to five years versus the industry average of 1.9%, it suggests a healthy financial backdrop for the company's growth initiatives.

Positive Earnings Estimate Revisions: A Promising Sign

An often overlooked but critical element for stock valuation is the trend in earnings estimate revisions. Stocks with a positive trend in earnings estimates usually experience upward stock price movements in the short term. Deckers currently enjoys an upward trend in earnings estimates, with the Zacks Consensus Estimate for the current year escalating by 12.4% over the past month.

Deckers, with a top Zacks Rank and a Growth Score of A, presents a compelling case for outperformance in the growth stock category. This backdrop makes Deckers an attractive bet for growth investors looking for potential high returns.

Growth, Earnings, Investment