DCF Studio

    DECK · NYQ · Consumer Cyclical

    Deckers Outdoor Corporation

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 139.71

    Market price

    USD 78.43

    Implied upside

    +78.1%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    AdjustedCapital expenditure runs at 1.9% of revenue against depreciation of 1.4%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.

    Value Per Share

    Perpetuity growth
    USD 139.71+78.1%
    Exit multiple
    USD 121.38+54.8%
    Market price
    USD 78.43

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn2bnFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueUSD 6.3bnUSD 7.2bnUSD 8.3bnUSD 9.5bnUSD 10.9bn+14.7%
    EBITUSD 1.4bnUSD 1.6bnUSD 1.8bnUSD 2.0bnUSD 2.3bn+14.7%
    NOPATUSD 1.1bnUSD 1.2bnUSD 1.4bnUSD 1.6bnUSD 1.9bn+14.7%
    Add depreciation & amortisationUSD 85.1mUSD 97.6mUSD 111.9mUSD 128.4mUSD 147.3m+14.7%
    Less capital expenditureUSD -119.1mUSD -136.6mUSD -156.7mUSD -179.7mUSD -206.1m+14.7%
    Less increase in working capitalUSD 30.7mUSD 35.2mUSD 40.4mUSD 46.3mUSD 53.1m-14.7%
    Free cashflow to firmUSD 1.1bnUSD 1.2bnUSD 1.4bnUSD 1.6bnUSD 1.8bn+14.7%
    Discount factor0.95000.85730.77370.69820.6301-
    Present valueUSD 1.0bnUSD 1.0bnUSD 1.1bnUSD 1.1bnUSD 1.2bn+3.5%
    Present Value Of The ForecastUSD 5.4bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.100Reported 1.150, pulled toward 1.0 (Blume)
    Cost of equity11.05%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 10.7bn96.6% of capital
    Total debtUSD 375.2m3.4% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC10.81%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 139.71

    71% of EV

    Forecast FCFF, final year
    USD 1.8bn
    Capex at depreciation, working capital in reinvestment
    USD 1.9bn
    Less reinvestment at g/ROIC (7.0% of NOPAT)
    USD -129.0m
    Capitalised
    USD 1.7bn
    ROIC (reported)
    35.9%
    Terminal value, undiscounted
    USD 21.3bn
    Terminal value, discounted
    USD 13.4bn
    Enterprise value
    USD 18.8bn
    Less net debt
    USD -1.5bn
    Equity value
    USD 20.4bn

    Exit at 6.8x EBITDA

    Value per shareUSD 121.38

    66% of EV

    Terminal value, undiscounted
    USD 17.0bn
    Terminal value, discounted
    USD 10.7bn
    Enterprise value
    USD 16.2bn
    Less net debt
    USD -1.5bn
    Equity value
    USD 17.7bn

    Spread between methods: 14%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    8.81%165.27172.56180.99190.85202.54
    9.81%146.33151.57157.52164.33172.19
    10.81%131.47135.36139.71144.61150.15
    11.81%119.51122.47125.74129.37133.42
    12.81%109.68111.98114.49117.24120.28

    Outlined: this model. Green text: above today's price of 78.43. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year14.7%-0.9%-15.6pp
    EBIT margin21.6%11.4%-10.2pp
    Discount rate10.8%18.2%+7.4pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.