David Hay — Friday POW!: Deckers Outdoor (DECK) — tariff overhang lifting
"It's an even better value than it was two weeks ago" — UGG/HOKA parent, cut in half on tariff fears now mostly mitigated, record revenue, no debt, and a $1.8B buyback firing into a depressed price.
One-line take: This week's POW! is Deckers Outdoor (DECK), parent of UGG and HOKA, at ~$105 (off recent lows near $83). The stock fell nearly 50% in 2025 on tariff fears (down 15% in a single day) — but DECK slashed its FY2026 net tariff hit to just $25M from a $75–110M worst case (a ~77% cut via pricing and supply-chain moves), which re-rates the multiple by raising the "E." Record Q3 FY26 results (revenue $1.96B, GAAP EPS $3.33 well above consensus); FY26 guide up to $5.425B revenue / $6.80–6.85 EPS; ~14.7× P/E (~13.25 backing out $1.74B net cash), zero debt, ~$1B FCF ≈ after-tax income, and a $1.8B buyback remaining ($813M+ done in 9 months). HOKA growing low-teens; a third major brand could lift the long-run EPS CAGR toward ~12%. Technicals: broke the 2024 downtrend, back above the 200-day; Haymaker sees a case for the mid-$150s into the next earnings. A 2–4-quarter profit opportunity; the post-Iran-correction is "a better entry." First pick co-authored with new contributor Daniel Bustamante.
1. Stocks & names mentioned
| Ticker | Name | Research | View | What he said | At |
|---|
| DECK | Deckers Outdoor | QT · SA · STK · FA | Positive | Pick of the Week — UGG/HOKA parent, down ~50% in 2025 on a "tariff uncertainty overhang" now largely mitigated: FY26 net tariff hit slashed to ~$25M (from $75–110M, a ~77% cut) via pricing + supply-chain moves, re-rating the multiple. Record Q3 FY26 (rev $1.96B, GAAP EPS $3.33 well above consensus); FY26 guide raised to ≤$5.425B rev / $6.80–6.85 EPS; TTM EPS $7.04, 19.35% margin. ~14.7× P/E (~13.25 ex-$1.74B net cash), zero debt, ~$1B FCF ≈ after-tax income, $1.8B buyback remaining (bought at depressed prices). HOKA low-teens growth; a third brand could push long-run EPS CAGR ~12%. Broke the 2024 downtrend, back above the 200-day MA; "a strong move into the mid $150's" into next earnings. A 2–4-quarter opportunity; the Iran-correction dip is "a better entry." Idea co-authored with Daniel Bustamante. | read |
References only (not picks): brands UGG / HOKA (DECK's own), Warren Buffett (the "markets aren't efficient" epigraph). The Recommended-List footnote names LNC (Lincoln National — a $0.25 cost-figure revision), WDOFF (Wesdome — flagged "out of sequence," should sit just ahead of XAR) and XAR (SPDR S&P Aerospace & Defense ETF) — housekeeping notes on the image-only list, not write-ups. The Recommended List itself renders as an image (tickers not text-readable), so david-hay/portfolio.json is unchanged.
2. Talking points
A major announcement — new contributor Dan Bustamante
- Haymaker introduces Dan Bustamante, who has run a turnaround/value hedge fund since 2020; Haymaker has tracked his picks "for many years and has been most impressed." Like Team Haymaker, he overlays fundamentals with technicals and hunts multi-year-range breakouts toward 3-year and all-time highs — but is also willing to buy hard-hit names beginning to revive. This week's POW! is "a good example of that."
The Buffett frame — markets are far from efficient
- "I'd be a bum on the street with a tin cup if the markets were always efficient." Haymaker says inefficiency is "becoming progressively" worse — possibly the "terminal phase of no-think 'investing'."
The pick — Deckers, a familiar name cut in half
- DECK is down nearly 50% from a bit over a year ago and corrected ~12% since the Israel/US attack on Iran — "an even better value than it was two weeks ago." A company "we are all familiar with" (UGG, HOKA), in contrast to opaque modern names.
The crux — the tariff overhang is mostly gone
- The 2025 collapse was tariff-driven (down 15% in one day on the announcement). DECK cut its FY2026 net tariff impact to just $25M from a $75–110M unmitigated estimate — a ~77% reduction — via pricing passed to consumers without material demand loss, plus supply-chain adjustments. That lifts the "E" in the P/E and "materially improved the valuation."
Record financials and earnings momentum
- Q3 FY2026 (ended Dec 2025): revenue $1.96B, GAAP EPS $3.33 beating consensus by a wide margin; FY26 guide raised to up to $5.425B revenue and $6.80–6.85 EPS. TTM EPS $7.04, net income $1.04B, 19.35% margin.
Growth drivers — HOKA, UGG and a possible third brand
- HOKA (running/trail/lifestyle) is the standout, double-digit growth, expected low-teens revenue growth in FY26 on strong wholesale and international momentum; UGG adds reliable premium-footwear growth. International expansion + athleisure drive market-share and operating leverage; a successful third major brand could push EPS CAGR near 12%.
Valuation — cheap on P/E and P/S, plus a cash fortress
- ~$105 (up from ~$83 lows) is mid-teens forward P/E (FY27 basis), near the low end of history; P/E of 14.7 "particularly alluring," and DECK "has rarely traded this inexpensively" on both P/E and P/S. $1.74B net cash backs the effective P/E down to ~13.25 on a $15B cap; ~$1B FCF ≈ after-tax income.
The buyback — aggressive, into a depressed price
- $813M+ repurchased in nine months, expected to exceed $1B for the year; $1.8B remains authorized. Funded by abundant FCF and zero debt — "kudos to management" for buying while shares are depressed.
Technicals — downtrend broken, back above the 200-day
- The steep 2024-peak downtrend line is clearly broken (however you draw it). For the first time since the cliff-dive began over a year ago, DECK is back above its 200-day MA; it gapped +10% on prior earnings and held. Case for a strong move into the mid-$150s into the next earnings, with the recent correction offering a better entry.
Bottom line — brand, margins, balance sheet
- "We'd like to think we're getting all three, then some" — brand loyalty (HOKA), a margin-improvement story, and a strong balance sheet — at a bargain in a competitive industry. Recent sales and technicals alone make it "a stellar profit-making opportunity over the next two to four quarters."
Risk note — trim the rest of the book
- With many names extended and the backdrop worsening (war, oil, private-credit dislocations, a weakening jobs market), Haymaker urges attention to its Trim recommendations and even paring some Holds to raise cash — and suggests funding any new buys like DECK by reducing existing holdings.
3. In plain English
DECK — Deckers Outdoor Positive
Deckers is the company behind two footwear brands you've probably seen everywhere: UGG boots and HOKA running shoes. Its stock got cut roughly in half during 2025, almost entirely because of fears that new import tariffs would gut its profits (its shoes are made overseas). The key development is that those fears turned out to be overblown: Deckers found ways — raising some prices, rerouting its supply chain — to shrink the actual tariff cost to about $25 million instead of the feared $75–110 million. Because that cost comes straight off the bottom line, removing most of it makes the company's earnings (the "E" in price-to-earnings) jump, which makes the stock look cheaper overnight even at the same price.
Meanwhile the business is firing: record revenue, a big earnings beat, HOKA growing fast, no debt at all, about $1.7B of cash in the bank, and roughly $1B of genuine surplus cash being thrown off every year. Management is using that cash to buy back its own shares aggressively ($1.8B still authorized) while the price is depressed — exactly when buybacks add the most value. On the chart the long downtrend has broken and the stock has climbed back above its 200-day average for the first time in over a year. Haymaker (with new contributor Dan Bustamante) thinks the recovering business, cheap valuation and clean balance sheet set up a move toward the mid-$150s over the next two to four quarters, and the post-war-scare dip is a good entry point.
Summary derived from the paid Haymaker newsletter (text in transcript.txt) for personal study. Not investment advice. © Haymaker / David Hay for source material.