Dj Dir Stewart Sells 9000 Of Deckers Outdoor Corp >Deck

The Home Depot Inc. HD has reported third-quarter fiscal 2024 results, wherein earnings and sales surpassed the Zacks Consensus Estimate. Meanwhile, the company’s top line improved year over year in the third quarter of fiscal 2024, while earnings per share declined year over year.

Home Depot's adjusted earnings of $3.78 per share declined 1.8% from $3.85 in the year-ago quarter. However, the bottom line beat the Zacks Consensus Estimate of $3.65.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Net sales advanced 6.6% to $40.2 billion from $37.7 billion in the year-ago quarter. Also, sales surpassed the Zacks Consensus Estimate of $39.33 billion. The company’s sales included contributions from the recently completed acquisition of SRS Distribution Inc.

Shares of Home Depot rose 1.4% in the pre-market trading session on Nov. 12 due to HD’s robust third-quarter performance and raised view for fiscal 2024. The Zacks Rank #2 (Buy) company’s shares have rallied 16.6% in the past three months compared with the industry's rise of 16.4%.

Tractor Supply Company TSCO seems to be in a good spot, thanks to its sturdy business strategies. The company is reaping the benefits from its Life Out Here Strategy and the Neighbor’s Club membership program. Its ‘ONETractor’ strategy, which is aimed at connecting stores and online shopping, appears encouraging too. Shares of this leading rural retail farm and ranch store chain have gained 32.6% year to date against the industry’s 3.1% decline.

Recently, Tractor Supply revealed that it had agreed to acquire Allivet, which is a privately-held leading online pet pharmacy. This buyout will complement and reinforce the company’s portfolio of companion animals, equestrian and livestock customers. The deal will also enable TSCO to introduce a low-cost pet and animal pharmacy solution for the 37-million Neighbor’s Club members.

The new deal brings a key opportunity to gain share of wallet with the club members, about 75% of whom are pet owners. The deal will also strengthen the company’s product and services offering, extend its overall addressable market by $15 billion and solidify relationship between the companies.

TSCO’s Growth Strategies in Detail

Given the changing consumer trends, Tractor Supply is focused on integrating its physical and digital operations to offer consumers a seamless shopping experience. The company’s omnichannel investments include curbside pickup, same day and next-day delivery, a re-launched website and new mobile app. Management aims at leveraging AI technologies to boost search, redesign checkout and add a new refreshed homepage on personalization.

TSCO is significantly enhancing its Neighbor's Club offering. As the company continues to make investments in the program, it has been seeing strong growth in customer counts and customer retention. In the third quarter of 2024, the Neighbor's Club comp sales surpassed the company’s overall sales. Tractor Supply has reached an all-time high on its sales penetration, recording membership of more than 37 million members.

The company is also focused on improving personalization capabilities, mainly its customer data platform. Its live goods performance also bodes well. Digital sales continued to outperform, with double-digit growth in the third quarter of 2024. The company has been making major improvements in search and checkout. It has been accelerating its digital capabilities, which has been leading to higher customer engagement and conversion rate improvement.

Regarding its store-growth initiatives, Tractor Supply is persistently focused on the expansion of its store base and the incorporation of technological advancements to boost traffic and drive the top line. In the third quarter, TSCO introduced 16 flagship stores, bringing the year-to-date count to 54. Management intends to continue its store-opening initiatives in 2024.

Project Fusion is the company’s state-of-the-art space productivity program built to enrich customer experience in the mature store base. It currently has 45% of the chain in its Project Fusion layout and more than 550 garden centers. Such store investments target higher market share and boost productivity across the existing and new stores. Addition of product categories, greater ease of shopping and modern services enables the company to serve its customers efficiently.

Factors Hindering TSCO’s Growth

Tractor Supply has been reeling under higher depreciation and amortization along with the costs related to the opening of a distribution center. Also, cost inflation is concerning. During the third quarter, selling, general and administrative (SG&A) expenses, including depreciation and amortization, as a percentage of sales, expanded 119 basis points (bps) year over year. In dollar terms, the metric rose 6.2%.

The higher SG&A expense rate resulted from growth investments, which comprised the onboarding of a new distribution center, lapping a one-time depreciation cost benefit in the last year and modest deleveraged fixed costs. The new distribution center was nearly a 25-bps headwind on SG&A for the quarter. Further, the operating income was down 4.8% year over year, with the operating margin declining 63 bps to 9.4% in the reported quarter. In addition, a tepid retail sales environment is concerning.

Conclusion

TSCO has been taking cost-saving initiatives to tackle cost issues. Analysts seem quite optimistic about the company. The Zacks Consensus Estimate for 2024 sales and earnings per share (EPS) is currently pegged at $14.9 billion and $10.24, respectively. These estimates indicate corresponding growth of 2.5% and 1.5% year over year. The consensus estimate for 2025 sales and EPS is presently pegged at $15.7 billion and $11, respectively, indicating a year-over-year increase of 5.1% and 7.4%. Tractor Supply currently carries a Zacks Rank #3 (Hold).

Key Picks

We have highlighted three better-ranked stocks, namely Boot Barn BOOT, Abercombie ANF and Deckers DECK.

Boot Barn, a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The company has a trailing four-quarter earnings surprise of 6.8%, on average.

The Zacks Consensus Estimate for Boot Barn’s current financial-year sales indicates growth of 13.9% from the year-ago figure.

Abercrombie, a leading casual apparel retailer, currently carries a Zacks Rank of 2 (Buy). ANF delivered an earnings surprise of 16.8% in the last reported quarter.

The consensus estimate for Abercrombie’s current financial-year sales indicates growth of 13% from the year-ago figure.

Deckers, a footwear and accessories dealer, currently carries a Zacks Rank of 2. DECK delivered an average earnings surprise of 41.1% in the trailing four quarters.

The Zacks Consensus Estimate for Deckers’ current financial-year sales indicates growth of 13.7% from the year-ago figure.

Zacks Investment Research

Whether you're a growth, value, income, or momentum-focused investor, building a successful investment portfolio takes skill, research, and a little bit of luck.

But what's the best way to find the right combination of stocks? Because funding things like your retirement, your kids' college tuition, or your short- and long-term savings goals will definitely require significant returns.

Enter the Zacks Rank.

What is the Zacks Rank?

The Zacks Rank is a unique, proprietary stock-rating model that utilizes earnings estimate revisions to help investors build a winning portfolio.

There are four main factors behind the Zacks Rank: Agreement, Magnitude, Upside, and Surprise.

Agreement is the extent to which all brokerage analysts are revising their earnings estimates in the same direction. The greater the percentage of analysts revising their estimates higher, the better chance the stock will outperform.

Magnitude is the size of the recent change in the consensus estimate for the current and next fiscal years.

Upside is the difference between the most accurate estimate, which is calculated by Zacks, and the consensus estimate.

Surprise is made up of a company's last few quarters' earnings per share surprises; companies with a positive earnings surprise are more likely to beat expectations in the future.

Each factor is given a raw score, which is recalculated every night and compiled into the Zacks Rank. Utilizing this data, stocks are put into five different groups: Strong Buy, Buy, Hold, Sell, and Strong Sell.

The Power of Institutional Investors

The Zacks Rank also allows individual investors, or retail investors, to benefit from the power of institutional investors.

Institutional investors are the professionals who manage the trillions of dollars invested in mutual funds, investment banks, and hedge funds. Studies have shown that these investors can and do move the market due to the large amounts of money they invest with. Because of this, the market tends to move in the same direction as institutional investors.

In order to figure out the fair value of a company and its shares, these investors will build valuation models focused on earnings and earnings expectations. Because if you raise estimates for the bottom line, it creates a higher fair value for a company.

With these changes, institutional investors will act, usually buying stocks with rising estimates and selling those with falling estimates. An increase in earnings expectations can potentially lead to higher stock prices and bigger gains for the investor.

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How to Invest with the Zacks Rank

The Zacks Rank is known for transforming investment portfolios. In fact, a portfolio of Zacks Rank #1 (Strong Buy) stocks has beaten the market in 26 of the last 32 years, with an average annual return of +25.41%.

Moreover, stocks with a new #1 (Strong Buy) ranking have some of the biggest profit potential, while those that fell to a #4 (Sell) or #5 (Strong Sell) have some of the worst.

Let's take a look at

Deckers (DECK)

, which was added to the Zacks Rank #1 list on November 12, 2024.

Founded in 1973 and headquartered in Goleta, California, Deckers Outdoor Corporation is a leading designer, producer and brand manager of innovative, niche footwear and accessories developed for outdoor sports and other lifestyle-related activities. The company sells products primarily under five proprietary brands — UGG, HOKA, Teva, Sanuk and Other brands (mainly comprised of Koolaburra).

11 analysts revised their earnings estimate higher in the last 60 days for fiscal 2025, while the Zacks Consensus Estimate has increased $0.23 to $5.47 per share. DECK also boasts an average earnings surprise of 41.1%.

Earnings are forecasted to see growth of 12.6% for the current fiscal year, and sales are expected to increase 13.6%.

DECK has been moving higher over the past four weeks as well, up 10.2% compared to the S&P 500's gain of 3.3%.

Bottom Line

With a #1 (Strong Buy) ranking, positive trend in earnings estimate revisions, and strong market momentum, Deckers should be on investors' shortlist.

If you want even more information on the Zacks Ranks, or one of our many other investing strategies, check out the Zacks Education home page.

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Zacks Investment Research

Shares of Deckers Outdoor Corporation DECK have experienced a surge over the past year. The stock has rallied 69%, comfortably outpacing the Zacks Retail-Apparel and Shoes industry’s modest 25.3% growth. The company’s impressive growth can be attributed to its strategic emphasis on expanding brand presence and strengthening direct-to-consumer (DTC) channels.

The company’s commitment to innovation in product development and a strong focus on international market expansion have enabled it to outperform both the broader Retail-Wholesale sector and the S&P 500 index, which grew 35.8% and 36%, respectively, during the same period. Closing at $177.08 on yesterday, DECK stock is moving toward its 52-week high of $184.48 attained on June 3, 2024.

Deckers has shown solid upward momentum, currently trading above both its 200-day and 50-day simple moving averages (SMA), which are key indicators of price stability and long-term bullish trends. In yesterday’s trading session, DECK surpassed its 200-day SMA of $153.16 and 50-day SMA of $158.57. This technical strength, coupled with continued momentum, signals positive market sentiment and growing investor confidence in DECK's financial health and growth potential.

How much a stock's price changes over time is important for most investors, since price performance can both impact your investment portfolio and help you compare investment results across sectors and industries.

The fear of missing out, or FOMO, also plays a factor in investing, especially with particular tech giants, as well as popular consumer-facing stocks.

What if you'd invested in Deckers (DECK) ten years ago? It may not have been easy to hold on to DECK for all that time, but if you did, how much would your investment be worth today?

Deckers' Business In-Depth

With that in mind, let's take a look at Deckers' main business drivers.

Founded in 1973 and headquartered in Goleta, California, Deckers Outdoor Corporation is a leading designer, producer and brand manager of innovative, niche footwear and accessories developed for outdoor sports and other lifestyle-related activities. The company sells products primarily under five proprietary brands — UGG, HOKA, Teva, Sanuk and Other brands (mainly comprised of Koolaburra).

Its products are sold through specialty domestic retailers, international distributors and directly to end-users through its websites and catalogs. The company sells directly to global consumers through the Direct-to-Consumer (DTC) channel, which is comprised of e-commerce websites and retail stores. The brands are sold worldwide, including in the United States, Canada, Europe, Asia-Pacific and Latin America.

The UGG brand (52.2% of fiscal 2024 total revenues) has proven to be a highly resilient line of premium footwear, apparel and accessories with expanded product offerings. The company intends to continue diversifying the brand to drive year-round product sales through the expansion of women’s spring and summer footwear, men’s products and apparel, home goods and accessories.

The HOKA brand (42.1% of fiscal 2024 total revenues) is an authentic, premium line of year-round performance footwear, apparel and accessories.

The Teva brand’s product line (3.5% of fiscal 2024 total revenues) includes a range of performance, casual, footwear and trail lifestyle products.

The Sanuk brand (0.6% of fiscal 2024 total revenues) has manifested into a lifestyle brand with a presence in the relaxed casual shoe and sandal categories.

The company's Other brands (1.6% of fiscal 2024 total revenues) is a casual footwear fashion line using sheepskin and other plush materials.

Deckers has finalized an agreement to sell off the Sanuk brand, with the transaction anticipated to be completed by August 2024.

Bottom Line

Anyone can invest, but building a successful investment portfolio takes a combination of a few things: research, patience, and a little bit of risk. So, if you had invested in Deckers a decade ago, you're probably feeling pretty good about your investment today.

A $1000 investment made in November 2014 would be worth $12,127.11, or a 1,112.71% gain, as of November 12, 2024, according to our calculations. Investors should note that this return excludes dividends but includes price increases.

In comparison, the S&P 500 gained 194.23% and the price of gold went up 116.12% over the same time frame.

Looking ahead, analysts are expecting more upside for DECK.

Deckers' diverse brand portfolio, financial strength, and strategic growth initiatives make it a promising investment. Driven by HOKA and UGG’s impressive growth, balanced channel performance, and successful global expansion, Deckers shows a well-executed strategy. The company’s focus on innovation, expanding its consumer reach, and leveraging strong market trends positions it favorably for sustained success. DECK’s second-quarter results highlight growth in both direct-to-consumer and wholesale channels, alongside leading brand success. Management now envisions a 12% increase in fiscal 2025 net sales. However, DECK foresees potential gross margin pressure on the horizon, stemming from higher freight expenses and a more normalized promotional environment. We expect the gross margin to shrink 30 basis points in the fiscal year. Shares have gained 10.17% over the past four weeks and there have been 11 higher earnings estimate revisions for fiscal 2024 compared to none lower. The consensus estimate has moved up as well.

Zacks Investment Research