Deckers Outdoor Corporation
DECK · Consumer Cyclical · Annual report 2026-03-31 · 5 reported years · Figures in USD
Market Cap
11.45B USD
Price on 2026-10-13
Average of the Three Values
11.66B USD
The plain average of EPV, Profit and FCFF
Intrinsic / Market Ratio
1.02×
Average / Market Cap, the ratio the list ranks by
Margin of Safety (Average)
+1.8%
1 − Market Cap / Average of the Three Values
Price / Book
4.58×
Market Cap / Book Value as printed (2.50B)
Greenwald Value, Case C: Earnings Power
10.83B USD
Protected franchise · -5.7%
Evidence: N is a note in the company's reports, F a line of its financial statements, R a fact from recent research; +n is n more sources. This page reads the company's own reports at its price date; the screener's values, the hollow dots, read the data provider's figures at their own date, so they differ on purpose.
Price vs Value
Every value of the company against the Market Cap on the price date above.
Bottom line
Deckers is a capital-light brand franchise that the market already prices at about its full value: the intrinsic value of 11.65B USD is 1.8% away from the market cap of 11.44B USD, so there is no margin of safety. The price needs more than every projected year of Profit and FCFF to deliver, so the projections have no room to disappoint. Greenwald's value on the case, a reading beside the verdict, is the earnings power of 10.82B USD on a franchise case, -5.7% from the market cap. It sits below the intrinsic value: the average includes a Profit value of 14.10B USD growing at 10.4%, which lifts it above the earnings power, while the FCFF value of 9.38B USD, carrying the reported years' shrinking reinvestment at -4.5%, pulls it back.Book Value
Assets less liabilities, as printed
Asset Value
What an entrant would spend to reproduce the assets, less what is owed
EPV + Growth Value
From the report's figures
Profit
From the report's figures
23% capital at year 15 · 77% 15 years of profit
FCFF
From the report's figures
18% capital at year 15 · 82% 15 years of free cash flow, before the net cash or net debt
Average of the Three
Uncapped, as the screener averages them
Greenwald Value, Case C: Earnings Power
The value Greenwald assigns on this case
How Each Value Is Built
The screener's three formulas on the report's own figures. Each card reads the same way: the value as a sum of numbered terms, each term's calculation opened under it, from the reported figures to the value. The verdict rests on their plain average, as the screener ranks; the Greenwald value on the company's case is a reading beside it.
What it is worth
EPV + Growth
11.47B USD
what the normal year's earnings are worth for ever, plus growth that pays
Profit
14.12B USD
15 years of cash the shareholders can take out, and the equity left at year 15
FCFF
9.39B USD
15 years of cash for shareholders and lenders, less what is owed
Average Intrinsic Value
11.66B USD
The plain average of EPV, Profit and FCFF
Against the price
Market Cap
11.45B USD
the price on the date above times the shares
Intrinsic Value ÷ Market Cap
1.02×
the ratio the screener ranks by
Margin of Safety
+1.8%
1 − Market Cap / Average Intrinsic Value
EPV of the Operations (NOPAT over WACC)
8.91B USD
Net Cash to the Shareholders
+1.93B USD
Growth Value
+636.93M USD
Value
11.47B USD
①EPV of the Equity
10.83B USD②Growth Value
636.93M USDMarket value
The price on the date above times the shares.
Value vs market
1 minus the market cap as a share of the value.
①Present Value of the 15 Years of FCFE
10.91B USD②Equity at Year 15, Today
3.21B USDMarket value
The price on the date above times the shares.
Value vs market
1 minus the market cap as a share of the value.
①Present Value of the 15 Years of FCFF
6.12B USD②Invested Capital at Year 15, Today
1.35B USD③Net Cash to the Shareholders
1.93B USDMarket value
The price on the date above times the shares.
Value vs market
1 minus the market cap as a share of the value.
11.33B USD
Average on the reported years
EPV + Growth Value, Profit and FCFF on the years as reported
+332.39M USD
Growth by five-year blocks
Profit +744.42M USD, FCFF +252.76M USD
11.66B USD
Intrinsic value
the average the verdict rests on
Profit growth: the paid growth of the reported years.
FCFF growth: the paid growth of the reported years.
Profit growth by five-year blocks: years 1 to 5 10.4%, years 6 to 10 from 9.3% to 5.0%, years 11 to 15 5.0%, the risk-free rate of the report’s currency, the long-run ceiling of an economy’s growth. The return on new capital falls by year 10 to 23.1%, the average return on capital of the Footwear & Accessories industry in US, 10 companies, 1993 to 2024.
Measured on US's domestic companies, this company out. Largest: Nike Inc, 70.2% of the revenue. Left out: 19 not domestic.
FCFF growth by five-year blocks: years 1 to 5 -4.5%, years 6 to 10 from -2.6% to 5.0%, years 11 to 15 5.0%, the risk-free rate of the report’s currency, the long-run ceiling of an economy’s growth. The return on new capital falls by year 10 to 24.2%, the average return on capital of the Footwear & Accessories industry in US, 10 companies, 1993 to 2024.
Measured on US's domestic companies, this company out. Largest: Nike Inc, 70.2% of the revenue. Left out: 19 not domestic.
Earnings Power vs Assets
Does the business earn more than it would cost to rebuild? Greenwald's test for a moat.
Asset Value
What a newcomer would spend to rebuild it, less what it owes; the bar runs from every asset at the cautious end of its inputs to every asset at the generous end (see Adjusted Balance Sheet)
4.68B – 9.05B
Earnings Power Value
What the business earns, as if it never grew
10.83B USD
Market Cap
What the market pays for all the shares
11.45B USD
Logarithmic axis: 0.80× and 1.25× are the same distance from 1×.
Case A: The Assets Earn Too Little
The business earns less than it would cost to rebuild. A newcomer would not build it, so the value is what it earns, not what its assets cost.
Case B: A Normal Business
It earns about what its assets cost to rebuild: no moat and no penalty. The value is the asset value.
Case C: Something Protects It (This Company)
It earns well above what its assets cost. Something keeps newcomers out, and that franchise is worth the difference.
The case changes across the asset value's low to high range, so it is not certain.
Franchise value
Earnings power value less asset value: what a moat is worth, negative when there is none.
4.51B USD
Bear case
The bear case is that the protection or the earnings fall back toward the asset value of 6.32B USD, within a range of 4.68B USD to 9.04B USD.
Base case
The base case is what the reported years support: Greenwald's value on the case, the earnings power of the equity of 10.82B USD.
Bull case
The bull case is the intrinsic value of 11.65B USD: the average of the Greenwald value with growth of 11.46B USD, the Profit value of 14.10B USD and the FCFF value of 9.38B USD.
Expected Return
What a buyer at this price earns a year if the business holds: cash returned, organic growth and reinvestment, against the cost of equity.
5.6%
Cash Returned
Earnings Power less the cost of today's debt after tax (its rate × the debt), 889.00M USD, × 72.4% paid out, over the market cap
15.1%
Organic Growth
Revenue growth of 14.8% a year, the average of the reported years (Returns, Payouts and Debt), × value over price of 1.02
-9.6%
Reinvestment
-76.52M USD kept beyond what organic growth needs × 14.41 of value created per unit, over the market cap
11.1%
Expected Return a Year
At value equal to price: 10.8%
Against a cost of equity of 10.0%: above it by 1.1%. That is how much of the return the franchise may lose before it earns only its cost.
Paid out: the reported years' dividends and the buybacks beyond the shares issued, over net income, averaged. Value created per unit: the return on capital over the cost of equity. Working capital per unit of revenue: 39.6%.
What Comes Next
Dated events ahead that can matter to a holder, each with the quote that dates it.
- 19 Dec 2027Primary Credit Facility matures, renewal or refinancing dueDebt
Either way for holders
The undrawn $400 million unsecured revolver that backs liquidity and letters of credit must be renewed or replaced, which sets the terms of the company's committed bank funding, though no borrowings depend on it today.
Earnings Power, Step by Step
Average margin on sustainable revenue, average tax, depreciation above maintenance CapEx.
From Revenue to the Value of the Operations
5.48B USD
Latest Revenue
20.9%
Average Operating Margin, Latest 5 Reported Years
1.14B USD
Sustainable Operating Profit
22.0%
Average Tax Rate
-2.42M USD
Depreciation Above Maintenance CapEx, After Tax
889.00M USD
Earnings Power (NOPAT)
10.0%
Cost of Capital (WACC)
8.91B USD
EPV of the Operations
Cost of equity: 4.9799999999999995% the 10-year government bond in USD + beta 1.12 (the market's) × 4.46% the country's equity risk premium = 9.98%, in the currency of the figures it discounts.
No debt, so the cost of capital is the cost of equity.
The screener's rate, a check: 10.94%.
From the Operations to the Shareholders
EPV of the Operations
8.91B USD
Free Cash
cash the company may use freely
+1.91B USD
Assets the Business Does Not Need
Deferred tax assets, Deferred compensation plan assets (company-owned life insurance)
+71.99M USD
Debt
financial debt and leases
0 USD
Claims Ahead of the Shareholders
minority interests, a dividend already declared
0 USD
Legacy Liabilities
pensions, lawsuits, environment: inherited from the past
-55.66M USD
EPV of the Equity
10.83B USD
9 of 25 cells are above the price: the EPV of the equity depends on the assumptions.
EPV of the equity in USD; the outlined cell is the analysis's own. Green above the market cap (11.45B), red below.
Returns, Payouts and Debt
What each reported year earned, paid to shareholders and owed, as the report prints it, before any adjustment.
Return on Capital, 2026
156.3%
operating profit after tax over book plus net debt
Dividend Yield
0.0%
the latest year's dividends over the Market Cap on the price date above
Paid Out in All, 2026
105.9%
dividends and the buybacks beyond the shares issued, over profit
Net Cash, 2026
1.91B USD
cash above all debt
Dividend policy: The company has not declared or paid any cash dividends on its common stock since its inception and returns capital through share repurchases; its revolving credit agreements would allow dividends as long as leverage ratios are respected and no event of default has occurred.
Lenders' conditions
- The financial covenant requires the total net leverage ratio to be no greater than 3.75 to 1.00; as of March 31, 2026 the company complies with all financial covenants under the Primary Credit Facility and the China Credit Facility, with no balance drawn on either.
- Cash dividends and share repurchases are allowed only while the company stays within certain leverage ratios and no event of default has occurred; as of March 31, 2026 it had not exceeded these ratios and no defaults had occurred.
- In some cases a default under one revolving credit facility could trigger a cross-default under the company's other facilities.
Financial Statements
Every line the reports print, before any adjustment, then what is calculated from them. Open a period for the document it comes from.
Who Owns It
Every holder of 5% or more of the capital the reports and the research name (5% is the share at which holders must disclose), then the rest of the capital.
The reports and the research name no holder of 5% or more.
Peers
The company against listings in the same industry: how the market prices them, what they earn.
| Peer | Market | Market Cap (USD) | Price / Book | ROE | Op. Margin |
|---|---|---|---|---|---|
ONON On Holding AG | US | 10.10B | 4.26× | 23.9% | 14.0% |
CROX Crocs, Inc. | US | 5.72B | 4.13× | 42.3% | 24.2% |
BIRK Birkenstock Holding plc | US | 5.45B | 1.70× | 12.4% | 29.0% |
SHOO Steven Madden, Ltd. | US | 3.25B | 3.34× | 15.9% | 6.7% |
NKE NIKE, Inc. | US | 55.46B | 3.64× | 21.6% | 7.9% |
WWW Wolverine World Wide, Inc. | US | 1.68B | 3.59× | 27.7% | 9.8% |
7936.T ASICS Corporation | JP | 18.74B | 8.41× | 42.2% | 22.6% |
8050.T Seiko Group Corporation | JP | 5.46B | 4.91× | 15.4% | 15.6% |
ADS.F adidas AG | DE | 28.37B | 3.91× | 24.3% | 8.5% |
PUM.F PUMA SE | DE | 4.11B | 1.96× | -22.6% | -2.5% |
7762.T Citizen Watch Co., Ltd. | JP | 3.73B | 1.97× | 10.9% | 10.1% |
1440.HK Star Shine Holdings Group Limited | HK | 3.12B | 98.08× | -19.7% | 2.7% |
Footwear & Accessories in the screener: 12 of 36, the same market first, then the closest in size. The company's own figures are from its report (2026): net income over the printed book value, operating profit over revenue.
In Our Strategy
Where the screener ranks the company and whether the strategy would buy it.
Not in what the strategy buys
Place 532 of 2,309 by value in its market (US). The strategy buys the first 25.
Place 1 is the cheapest: the highest value over market cap. Only companies above their market's floor count, $1B in every market and $500M in Romania, and a company listed in several markets counts once.
Adjusted Balance Sheet
From the book value the balance sheet prints to the asset value a buyer would count.
Book Value
assets less liabilities, as printed
2.50B USD
Trade accounts receivable, net of allowances ($38,198 and $32,883 as of March 31, 2026, and March 31, 2025, respectively) (Note 2 and Schedule II)
+19.94M USD
Prepaid expenses
+84.02M USD
Other current assets
-82.20M USD
Income tax receivable
-1.83M USD
Property and equipment, net of accumulated depreciation ($457,173 and $402,964 as of March 31, 2026, and March 31, 2025, respectively) (Note 3)
+4.57M USD
Goodwill (Note 1)
-14.00M USD
Other intangible assets, net of accumulated amortization ($20,968 and $25,014 as of March 31, 2026, and March 31, 2025, respectively) (Note 1)
+43.07M USD
Deferred tax assets, net (Note 5)
-19.45M USD
UGG brand
not in the balance sheet
+1.42B USD
HOKA brand
not in the balance sheet
+1.15B USD
Organisation (management, sourcing and supply network, systems)
not in the balance sheet
+710.48M USD
Trained workforce
not in the balance sheet
+90.09M USD
Product development and design portfolio
not in the balance sheet
+206.90M USD
Wholesale customer relationships
not in the balance sheet
+96.34M USD
Direct-to-consumer customer base and e-commerce
not in the balance sheet
+113.32M USD
Asset Value
at reproduction, less what is owed
6.32B USD
Investor Checklist
The questions to ask of any business, answered from the reports and research, or marked unknown.
Answered
20
questions
Not applicable
2
questions
Unknown
0
questions
business
The largest customers, products, suppliers and countries, and their share of revenue.
Sales are spread across many customers but concentrated in two brands, in the US market and in Southeast Asian production. The reports state that 'no single customer accounted for 10.0% or more of our total net sales during fiscal year 2026', yet trade receivables are concentrated in one customer.
- Brands: HOKA and UGG drive almost all revenue.
- HOKA: 'HOKA brand net sales increased 15.9% to $2,587,330' (in thousands).
- UGG: the largest brand by sales, and it kept growing.
- Other brands: only Teva remains; Sanuk was sold, and Koolaburra and AHNU were phased out.
- Countries: '41.7% of our total net sales for the year ended March 31, 2026, generated from operations outside the US'.
- Domestic: '$ 3,191,518', up '0.2 %' (in thousands).
- International: '2,280,778', up '26.8' percent (in thousands).
- Customers: no single customer reaches the threshold of net sales, but receivables are concentrated in one customer and are generally unsecured.
- Manufacturing: 'production of our finished goods was predominantly from Vietnam and Indonesia, while less than 5% was from China or any other individual country'.
- Suppliers of raw materials: both key materials depend on very few suppliers.
- Sheepskin: comes mainly from Australia and is processed by two tanneries in China.
- Sugarcane-derived EVA: comes mostly from a single Brazilian supplier.
Fixed against variable costs, operating leverage, the main cost lines and what drives them.
Product cost is mostly variable, because all manufacturing is bought from contractors order by order. The fixed part sits in SG&A: stores, leases, distribution, staff and brand spending. Fiscal 2026 cost of sales was 2,314,570,000 against SG&A of 1,894,823,000. 'Gross margin decreased to 57.7% from 57.9%', and operating margin stayed 'above 23%'.
- Cost of sales (2,314,570,000): contract-manufactured product, including shipping paid to third-party carriers, and tariffs.
- Advertising and marketing: 'Such costs amounted to $495,838, $432,198, and $348,852' (in thousands) for fiscal 2026, 2025 and 2024. This is growing fast and is partly discretionary.
- Distribution: warehousing and third-party logistics are charged in SG&A, not in cost of sales.
- Leases: cash paid for operating leases was 92,823,000 in fiscal 2026 against 70,326,000 a year earlier, a fixed cost that rose sharply.
- Stock-based compensation: 44,835,000 in fiscal 2026.
- Operating leverage: moderate. Product cost moves with volume, while store, lease, payroll and brand costs do not, so a sales decline would compress the margin.
How revenue, volumes and margins moved through past cycles and shocks.
The years in the reports show only growth, so they do not show how the business behaves in a downturn. Net sales rose from 4,287,763,000 to 4,985,612,000 to 5,472,296,000, and income from operations from 927,514,000 to 1,179,092,000 to 1,262,903,000. Within the year sales are seasonal, weighted to the autumn and winter quarters because of UGG.
- Volume: 'We experienced an increase of 6.2% in the total volume of units sold to 78,700 from 74,100', so growth came from both volume and price.
- Margin: management once warned that the record gross margin might not be fully sustained as promotions normalised. In fiscal 2026, tariffs lowered the gross margin only slightly.
- Seasonality: UGG concentrates sales in the third fiscal quarter and requires inventory build-ups; HOKA's growth eases the pattern.
industry
What could replace the product or shrink the industry: substitutes, technology, energy transition, regulation.
Nothing in the reports threatens the footwear category itself. The risks are to individual brands and to costs: fashion cycles, competition in running, tariffs and trademark protection. Environmental regulation is not expected to matter: 'Compliance with federal, state, and local environmental regulations has not had, and it is not expected to have, any material effect'.
- Brand substitution: consumers switch brands readily in a fashion-driven market, which is how HOKA gained share.
- Trademark: a claim that 'ugg' is generic 'was successful in Australia, but similar claims have been rejected by courts in the US, China, the Republic of Türkiye, and the Netherlands'.
- Tariffs: new US tariffs on Vietnam and Indonesia took effect on July 24, 2026.
- Tax regulation: the US corporate alternative minimum tax and the OECD Pillar Two global minimum tax may raise future tax expense.
moat
Return on equity and on capital over the years in the statements, against the cost of capital.
Returns stand far above the cost of capital of 10.0%. The Profit projection reads a return on equity of 43.1%, and the FCFF projection a return on capital of 129.7%, because the business carries little operating capital beside its large cash balance.
- Net income against equity, year by year: the return was high in every year shown.
- Fiscal 2026: net income 1,024,071,000 on equity of 2,499,638,000.
- Fiscal 2025: net income 966,091,000 on equity of 2,513,013,000.
- Fiscal 2024: net income 759,563,000 on equity of 2,107,468,000.
- Segment margins: 'Segment operating margin 35.2 % 38.2 % 11.2 % 36.0 %', before the costs that are not allocated to segments.
When the protections expire or could erode: licence or concession end dates, patent expiries, regulatory reviews, contract renewals.
No licence, concession or contract protects the business, so no protection has an end date. The franchise lasts only as long as the brands keep consumers. Design patents ('we hold 201 designs and inventions with corresponding design or utility patent registrations, plus 29 designs and inventions which are currently pending registration') protect particular designs but are easily designed around.
- Brand preference: the main protection, and a weak, fashion-dependent one.
- UGG trademark: held generic in Australia; challenges elsewhere have failed, but the risk recurs.
- Sheepskin supply: scarce, with 'limited suppliers that are able to provide the quantity and quality of sheepskin that we require'. Fixed contracts help UGG, but they are not exclusive.
earnings
One-off items, accruals against cash, capitalised costs, stock-based pay, provisions built or released.
Earnings are largely backed by cash: operating cash flow of 1,181,955,000 in fiscal 2026 against net income of 1,024,071,000. They carry real non-cash costs and some judgement-heavy estimates. Part of past cash flow came from working capital timing that can reverse.
- Stock-based pay: 37,288,000 in fiscal 2024 and 44,835,000 in fiscal 2026, a real cost recorded in SG&A.
- One-off items: the Sanuk trademark impairment of 8,164,000 in fiscal 2024, and impairments of property and equipment and cloud computing arrangements of 4,290,000 in fiscal 2025.
- Sales returns: the wholesale return estimate was a critical audit matter because it required a high degree of judgement.
- Credit losses: bad debt expense rose from 789,000 to 5,032,000 to 6,345,000.
- Tax: the effective rate rose 'primarily due to increases in net unrecognized tax benefits'. Cash taxes paid were well below tax expense because of accelerated deductions under the new US tax law.
- Working capital: earlier gains came from the timing of supplier payments and leaner inventories, which can reverse.
Capital spending needed just to keep capacity, against growth spending and against depreciation.
The reports do not split capital spending between maintenance and growth. Spending is low and runs modestly above depreciation. Purchases of property and equipment were 89,365,000, 86,171,000 and 84,623,000 in fiscal 2024 to 2026, against depreciation, amortization and accretion of 57,587,000, 69,353,000 and 75,773,000.
- Planned spending goes mainly to warehouses and distribution centres, new HOKA retail stores, store refreshes, IT systems and office upgrades, which is largely growth.
- Leasehold improvements grew strongly with the retail expansion, and new lease assets jumped in the latest year.
balance sheet
Guarantees, purchase commitments, leases, pensions, litigation, environmental and decommissioning duties, obligations at the end of a concession.
There are no pensions or decommissioning duties in the reports, but there are purchase commitments, leases not yet started and some debt-like liabilities. The reports describe purchase commitments as significant and not on the balance sheet.
- Product purchase orders: large open orders with contract manufacturers, mostly due within a year and partly cancellable.
- Commodity contracts: non-cancellable minimum-volume contracts for sheepskin, UGGplush and sugarcane-derived EVA, with more signed after the year end. Missing the minimum volumes can trigger fees or deposits.
- Service commitments: non-cancellable logistics, IT and sales management services.
- Leases signed but not yet started: excluded from the recorded lease liability, mainly an office expansion.
- Uncertain tax positions: gross unrecognised tax benefits at 'Ending balance $ 26,338' (in thousands).
- Deferred compensation: 'Non-qualified deferred compensation liability (29,291)' (in thousands), funded mainly through corporate-owned life insurance.
- Asset retirement obligations: owed to restore leased stores, offices and warehouses.
- Guarantees and indemnities: the parent guarantees the China facility for more than its amount. Intellectual property indemnities to licensees and distributors have no cap, though payments are judged remote.
- Contingent gain: possible tariff refunds, not recognised on the balance sheet.
Debt, maturities, covenants, refinancing needs, liquidity.
The company has no borrowings and holds cash of 1,907,249,000 at March 31, 2026, mostly in money-market funds and bank deposits. Net debt to EBITDA is -1.42x. The main revolving facility is unsecured and undrawn apart from small letters of credit, and it matures on 2027-12-19.
- Covenant: the only financial covenant caps total net leverage, and the company complies with it.
- Cross-default: a default under one revolving facility can trigger defaults under the others.
- Change of control: an event of default under the credit agreement.
- Leases: operating lease liabilities of 83,931,000 current and 291,263,000 long-term, the only debt-like financing.
- China facility: uncommitted and undrawn apart from small bank guarantees.
Assets the business does not need to run: surplus cash, investments, idle land or plant.
Cash is the main asset the business does not need to run. All 1,907,249,000 is surplus, because the undrawn revolver covers the seasonal working capital build. Part of the cash sits abroad and could bear withholding tax if repatriated.
- Cash and money-market funds: 1,907,249,000.
- Deferred compensation plan assets (company-owned life insurance): these fund the matching deferred compensation liability.
- Deferred tax assets: net 68,501,000, expected to be recovered.
- Headquarters land in Goleta: carried at historical cost and not depreciated, so its value may differ from market. It is used by the business, not idle.
management
Dividends, buybacks, investments and acquisitions over time, and what they returned.
Capital is returned through buybacks, never dividends: the company has never paid cash dividends. Repurchases of common stock rose from 414,931,000 to 567,002,000 to 1,075,100,000 in fiscal 2024 to 2026, shrinking the share count. There were no acquisitions in the years shown.
- Share count: '139,978 and 150,201 shares issued and outstanding as of March 31, 2026, and March 31, 2025, respectively' (in thousands).
- Authorisation: after the year end the board added a large new buyback authorisation, and buybacks continued.
- Reinvestment: capital spending stays low against operating cash flow.
- What the buybacks returned: the market cap of 11.44B USD stands above the intrinsic value of 11.65B USD, so buybacks at today's price return less than they cost.
Minority protection, related-party dealings, the board and its independence (the main shareholders have their own section).
Minority shareholders face anti-takeover provisions in the charter, the bylaws and Delaware law. The reports given show no related-party dealings, but they also do not establish the board's independence.
- Anti-takeover: charter, bylaws and Delaware law provisions could hinder a change of control.
- Board: the reports give its size and composition, but not its independence.
- Auditor: has served the company for a long time.
- Insider selling: the CFO adopted a Rule 10b5-1 trading plan that may sell shares.
Who runs it, their record, their incentives, turnover.
The long-serving CEO and President announced their retirement and is expected to stay on the board. The Chief Commercial Officer was named the next CEO and President, an internal succession. The record under the outgoing team is strong: 'In fiscal year 2026, revenue increased 10% year-over-year to approximately $5.5 billion and diluted earnings per share grew 11% to $7.02'.
- Transition risk: the company itself flags the leadership change as a risk.
- Incentives: restricted and performance stock units. Performance units can vest up to a multiple of target, and older awards are expected to vest above target.
- Names and turnover: the reports given do not name the executives or show turnover beyond the CEO change.
regulation
Who regulates, how prices or tariffs are set, the allowed return, the next review.
No regulator sets the company's prices or its allowed return: it designs and sells footwear at market prices. Only trade, tariff and tax rules apply, and these are covered under political and country risk.
Special taxes, state intervention, currency, country risk.
The main country risk is US tariffs on goods made in Vietnam and Indonesia, where production is concentrated. Currency is the second risk, because a large and rising share of sales is outside the US.
- Tariffs: Section 301 tariffs took effect on July 24, 2026.
- Vietnam: 'final Section 301 rate is 13%, down from 20% under IEEPA'.
- Indonesia: 'final Section 301 rate is 10%, down from 19% under IEEPA'.
- Tariff refunds: some US tariffs the company paid were invalidated by the US Supreme Court, so refunds are possible but uncertain.
- China: possible US sanctions on China could disrupt international distribution, and UGG's sheepskin is processed by two tanneries in China.
- Currency: '41.7% of our total net sales' came from outside the US. The company hedges with short-dated foreign currency contracts.
- Tax: the OECD global minimum tax may raise the rate on low-taxed foreign profits, and repatriating cash could incur withholding tax.
technology
The systems the business runs on (control, IT, automation): their state, cyber risk, obsolescence.
The business runs on two self-managed US distribution centres with a complex warehouse management system, international warehouses run by third-party logistics providers, and e-commerce sites. Several system changes carry execution risk, and there has been no material impact from cybersecurity incidents in the last three years.
- Planning system: a new end-to-end planning system is being built to support growth.
- Cloud computing: capitalised implementation costs not yet in service grew sharply. An earlier underperforming cloud arrangement was impaired.
- Logistics changes: one international third-party logistics provider is being replaced, and HOKA wholesale distribution is moving into the Mooresville DC.
- Cyber: no material impact from incidents in the last three years.
For a technology-driven business: switching costs, network effects, proprietary data, R&D as investment, marginal cost of scale, retention.
This is not a technology-driven business: its edge is brand preference, not switching costs, network effects or proprietary data. Research and development is expensed within SG&A, and the design patents are easily designed around.
Age and condition of the physical assets, remaining life, deferred maintenance.
The physical assets are light and mostly recent: leased stores, distribution centres and offices, equipment, fit-outs and IT, plus the owned Goleta headquarters. Accumulated depreciation was '$457,173 and $402,964' (in thousands) at March 31, 2026 and 2025, large relative to gross property. The reports show no deferred maintenance.
- Distribution: a third US distribution centre started operating, and the Mooresville second location is now operational.
- Stores: recurring impairments of underperforming retail store assets, with none in fiscal 2026.
- Remaining life: the reports give the age of the Moreno Valley and Mooresville centres, but not a remaining life for the asset base.
market
What the price implies, liquidity, analyst coverage, why the market pays what it pays.
The market pays 11.44B USD, which is 1.06x the earnings power and close to the Greenwald value with growth of 11.46B USD. The price therefore assumes the franchise keeps growing, not just holds its profit. It offers 11.1% a year with a dividend yield of 0.0%. The company is in the S&P 500, which gives it liquidity; the reports given do not describe analyst coverage.
Why the gap might never close.
There is no discount to close: the price already stands above the intrinsic value. The risk is the reverse, that the premium never earns back.
- FCFF: the reported years show capital released rather than reinvested, so FCFF growth is -4.5%, and that pulls the average below the price.
- Domestic market: domestic sales were flat, so growth depends on international markets and HOKA.
- Buybacks: they keep spending cash above the intrinsic value.
- Cash abroad: part of the cash could bear withholding tax if repatriated.
decision
The facts that, if observed, would prove the conclusion wrong.
The conclusion is that the price is about fully valued with no margin of safety. These facts, if observed, would prove it wrong.
- Proving it too cautious: the evidence would show growth well beyond what the reported years paid for.
- Domestic sales re-accelerating alongside the international growth.
- Margins held above the reported 'operating margin remaining above 23%' while tariffs fall and tariff refunds arrive.
- Reinvestment turning positive at the current high returns, so FCFF grows.
- Proving it too generous: the evidence would show the franchise weakening.
- HOKA growth stalling or UGG sales falling as fashion moves on.
- Gross margin falling as full-price selling gives way to promotions.
- A successful generic-name challenge to the UGG trademark outside Australia.
- A disruption in sheepskin supply or Southeast Asian production.
| Question | Answer | Evidence | |
|---|---|---|---|
| business | |||
| The largest customers, products, suppliers and countries, and their share of revenue. | Sales are spread across many customers but concentrated in two brands, in the US market and in Southeast Asian production. The reports state that 'no single customer accounted for 10.0% or more of our total net sales during fiscal year 2026', yet trade receivables are concentrated in one customer.
| ||
| Fixed against variable costs, operating leverage, the main cost lines and what drives them. | Product cost is mostly variable, because all manufacturing is bought from contractors order by order. The fixed part sits in SG&A: stores, leases, distribution, staff and brand spending. Fiscal 2026 cost of sales was 2,314,570,000 against SG&A of 1,894,823,000. 'Gross margin decreased to 57.7% from 57.9%', and operating margin stayed 'above 23%'.
| ||
| How revenue, volumes and margins moved through past cycles and shocks. | The years in the reports show only growth, so they do not show how the business behaves in a downturn. Net sales rose from 4,287,763,000 to 4,985,612,000 to 5,472,296,000, and income from operations from 927,514,000 to 1,179,092,000 to 1,262,903,000. Within the year sales are seasonal, weighted to the autumn and winter quarters because of UGG.
| ||
| industry | |||
| What could replace the product or shrink the industry: substitutes, technology, energy transition, regulation. | Nothing in the reports threatens the footwear category itself. The risks are to individual brands and to costs: fashion cycles, competition in running, tariffs and trademark protection. Environmental regulation is not expected to matter: 'Compliance with federal, state, and local environmental regulations has not had, and it is not expected to have, any material effect'.
| ||
| moat | |||
| Return on equity and on capital over the years in the statements, against the cost of capital. | Returns stand far above the cost of capital of 10.0%. The Profit projection reads a return on equity of 43.1%, and the FCFF projection a return on capital of 129.7%, because the business carries little operating capital beside its large cash balance.
| ||
| When the protections expire or could erode: licence or concession end dates, patent expiries, regulatory reviews, contract renewals. | No licence, concession or contract protects the business, so no protection has an end date. The franchise lasts only as long as the brands keep consumers. Design patents ('we hold 201 designs and inventions with corresponding design or utility patent registrations, plus 29 designs and inventions which are currently pending registration') protect particular designs but are easily designed around.
| ||
| earnings | |||
| One-off items, accruals against cash, capitalised costs, stock-based pay, provisions built or released. | Earnings are largely backed by cash: operating cash flow of 1,181,955,000 in fiscal 2026 against net income of 1,024,071,000. They carry real non-cash costs and some judgement-heavy estimates. Part of past cash flow came from working capital timing that can reverse.
| ||
| Capital spending needed just to keep capacity, against growth spending and against depreciation. | The reports do not split capital spending between maintenance and growth. Spending is low and runs modestly above depreciation. Purchases of property and equipment were 89,365,000, 86,171,000 and 84,623,000 in fiscal 2024 to 2026, against depreciation, amortization and accretion of 57,587,000, 69,353,000 and 75,773,000.
| ||
| balance sheet | |||
| Guarantees, purchase commitments, leases, pensions, litigation, environmental and decommissioning duties, obligations at the end of a concession. | There are no pensions or decommissioning duties in the reports, but there are purchase commitments, leases not yet started and some debt-like liabilities. The reports describe purchase commitments as significant and not on the balance sheet.
| ||
| Debt, maturities, covenants, refinancing needs, liquidity. | The company has no borrowings and holds cash of 1,907,249,000 at March 31, 2026, mostly in money-market funds and bank deposits. Net debt to EBITDA is -1.42x. The main revolving facility is unsecured and undrawn apart from small letters of credit, and it matures on 2027-12-19.
| ||
| Assets the business does not need to run: surplus cash, investments, idle land or plant. | Cash is the main asset the business does not need to run. All 1,907,249,000 is surplus, because the undrawn revolver covers the seasonal working capital build. Part of the cash sits abroad and could bear withholding tax if repatriated.
| ||
| management | |||
| Dividends, buybacks, investments and acquisitions over time, and what they returned. | Capital is returned through buybacks, never dividends: the company has never paid cash dividends. Repurchases of common stock rose from 414,931,000 to 567,002,000 to 1,075,100,000 in fiscal 2024 to 2026, shrinking the share count. There were no acquisitions in the years shown.
| ||
| Minority protection, related-party dealings, the board and its independence (the main shareholders have their own section). | Minority shareholders face anti-takeover provisions in the charter, the bylaws and Delaware law. The reports given show no related-party dealings, but they also do not establish the board's independence.
| ||
| Who runs it, their record, their incentives, turnover. | The long-serving CEO and President announced their retirement and is expected to stay on the board. The Chief Commercial Officer was named the next CEO and President, an internal succession. The record under the outgoing team is strong: 'In fiscal year 2026, revenue increased 10% year-over-year to approximately $5.5 billion and diluted earnings per share grew 11% to $7.02'.
| ||
| regulation | |||
| Who regulates, how prices or tariffs are set, the allowed return, the next review. | No regulator sets the company's prices or its allowed return: it designs and sells footwear at market prices. Only trade, tariff and tax rules apply, and these are covered under political and country risk. | ||
| Special taxes, state intervention, currency, country risk. | The main country risk is US tariffs on goods made in Vietnam and Indonesia, where production is concentrated. Currency is the second risk, because a large and rising share of sales is outside the US.
| ||
| technology | |||
| The systems the business runs on (control, IT, automation): their state, cyber risk, obsolescence. | The business runs on two self-managed US distribution centres with a complex warehouse management system, international warehouses run by third-party logistics providers, and e-commerce sites. Several system changes carry execution risk, and there has been no material impact from cybersecurity incidents in the last three years.
| ||
| For a technology-driven business: switching costs, network effects, proprietary data, R&D as investment, marginal cost of scale, retention. | This is not a technology-driven business: its edge is brand preference, not switching costs, network effects or proprietary data. Research and development is expensed within SG&A, and the design patents are easily designed around. | ||
| Age and condition of the physical assets, remaining life, deferred maintenance. | The physical assets are light and mostly recent: leased stores, distribution centres and offices, equipment, fit-outs and IT, plus the owned Goleta headquarters. Accumulated depreciation was '$457,173 and $402,964' (in thousands) at March 31, 2026 and 2025, large relative to gross property. The reports show no deferred maintenance.
| ||
| market | |||
| What the price implies, liquidity, analyst coverage, why the market pays what it pays. | The market pays 11.44B USD, which is 1.06x the earnings power and close to the Greenwald value with growth of 11.46B USD. The price therefore assumes the franchise keeps growing, not just holds its profit. It offers 11.1% a year with a dividend yield of 0.0%. The company is in the S&P 500, which gives it liquidity; the reports given do not describe analyst coverage. | ||
| Why the gap might never close. | There is no discount to close: the price already stands above the intrinsic value. The risk is the reverse, that the premium never earns back.
| ||
| decision | |||
| The facts that, if observed, would prove the conclusion wrong. | The conclusion is that the price is about fully valued with no margin of safety. These facts, if observed, would prove it wrong.
| ||
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