Deckers Outdoor Corporation DECK appears to be a solid bet, thanks to its sturdy efforts to remain on growth trajectory. We expect the company to continue benefiting from its focus on expanding brand assortments, introducing more innovative line of products, targeting consumers digitally through marketing and sturdy e-commerce along with optimizing omni-channel distribution.

All these factors helped the company to deliver robust first-quarter fiscal 2020 results, wherein it continued its positive earnings and sales surprise for the 10th straight time. Markedly, better-than-expected results prompted management to lift fiscal 2020 view. (Read: Deckers Posts Narrower-Than-Expected Q1 Loss, Ups View)

In the past one year, shares of this Goleta, CA-based company have increased approximately 23%, significantly outperforming the industry’s decline of 0.1%.

Further, analysts are steadily growing bullish on the stock. This is apparent from the rise in earnings estimates. The Zacks Consensus Estimate of $8.65 for fiscal 2020 and $9.47 for fiscal 2021 has moved north by 20 cents and 19 cents, respectively, in the past 30 days.

All said, let’s take a closer look at the aspects driving this Zacks Rank #1 (Strong Buy) stock, which also flaunts a VGM score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors Narrating Deckers’ Growth Story

Deckers is focusing on product and marketing strategies that are more skewed toward customers and in this respect it is implementing customer relationship management software and concentrating on loyalty program. Moreover, the company is focusing on expanding its product categories according to the customer purchasing trends. In order to capture incremental sales and margins, Deckers is selling directly to wholesale customers.

Also, the company is constantly developing its e-commerce portal to capture incremental sales. Deckers has made substantial investments to strengthen its online presence and improve shopping experience for its customers. Its focus on expanding programs — Retail Inventory Online; Infinite UGG; Buy Online, Return In Store; and Click and Collect — to enhance customers’ shopping experience is an added positive.

The company is making marketing investments to build brand awareness of HOKA ONE ONE and UGG Men’s and UGG Women’s non-core category. Impressive performance across UGG and HOKA ONE ONE brands aided the results. The first quarter results also gained from earlier delivery of wholesale and distributor shipments in the UGG brand and strong performance across HOKA ONE ONE brand aided by the launch of Carbon X.

Optimistic Sales View

Deckers now anticipates second-quarter net sales in the range of $515-$525 million. In the year-ago period, the company had reported $501.9 million net sales.

For fiscal 2020, net sales are estimated in the band of $2.100-$2.125 billion, which indicates year-over-year growth of about 4-5%. Management now expects revenues from HOKA ONE ONE brand to be increasing in the high 30% range for the year. The company had earlier guided net sales between $2.095 billion and $2.120 billion for fiscal 2020.

We expect all aforementioned factors to continue bolstering the company’s performance, and help it remain in investors’ good books.

Other Key Picks

Skechers U.S.A., Inc. SKX delivered average positive earnings surprise of 24.6% in the trailing four quarters. It has a long-term earnings growth rate of 15% and flaunts a Zacks Rank #1.

Target Corporation TGT has a long-term earnings growth rate of 7.1% and a Zacks Rank #1.

Rocky Brands, Inc. RCKY delivered average positive earnings surprise of 15.6% in the trailing four quarters. Currently, it carries a Zacks Rank #2 (Buy).

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