Stock Analysis on Net
Stock Analysis on Net

Deckers Outdoor Corp. (NYSE:DECK)

This company has been moved to the archive! The financial data has not been updated since February 5, 2024.

Present Value of Free Cash Flow to Equity (FCFE)

Microsoft Excel

In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Free cash flow to equity (FCFE) is generally described as cash flows available to the equity holder after payments to debt holders and after allowing for expenditures to maintain the company asset base.

Intrinsic Stock Value (Valuation Summary)

Deckers Outdoor Corp., free cash flow to equity (FCFE) forecast

US$ in thousands, except per share data

Microsoft Excel
Year Value FCFEt or Terminal value (TVt) Calculation Present value at 12.52%
01 FCFE0 456,409
1 FCFE1 580,771 = 456,409 × (1 + 27.25%) 516,139
2 FCFE2 714,297 = 580,771 × (1 + 22.99%) 564,159
3 FCFE3 848,115 = 714,297 × (1 + 18.73%) 595,304
4 FCFE4 970,900 = 848,115 × (1 + 14.48%) 605,648
5 FCFE5 1,070,130 = 970,900 × (1 + 10.22%) 593,258
5 Terminal value (TV5) 51,240,904 = 1,070,130 × (1 + 10.22%) ÷ (12.52% – 10.22%) 28,406,892
Intrinsic value of Deckers Outdoor Corp. common stock 31,281,400
 
Intrinsic value of Deckers Outdoor Corp. common stock (per share) $1,218.68
Current share price $851.41

Based on: 10-K (reporting date: 2023-03-31).

1 See details »

Disclaimer!
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.

Required Rate of Return (r)

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Assumptions
Rate of return on LT Treasury Composite1 RF 4.67%
Expected rate of return on market portfolio2 E(RM) 13.42%
Systematic risk of Deckers Outdoor Corp. common stock βDECK 0.90
 
Required rate of return on Deckers Outdoor Corp. common stock3 rDECK 12.52%

1 Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).

2 See details »

3 rDECK = RF + βDECK [E(RM) – RF]
= 4.67% + 0.90 [13.42% – 4.67%]
= 12.52%

FCFE Growth Rate (g)

FCFE growth rate (g) implied by PRAT model

Deckers Outdoor Corp., PRAT model

Microsoft Excel
Average Mar 31, 2023 Mar 31, 2022 Mar 31, 2021 Mar 31, 2020 Mar 31, 2019 Mar 31, 2018
Selected Financial Data (US$ in thousands)
Net income 516,822 451,949 382,575 276,142 264,308 114,394
Net sales 3,627,286 3,150,339 2,545,641 2,132,689 2,020,437 1,903,339
Total assets 2,556,203 2,332,250 2,167,705 1,765,118 1,427,206 1,264,379
Stockholders’ equity 1,765,733 1,538,825 1,444,225 1,140,120 1,045,130 940,779
Financial Ratios
Retention rate1 1.00 1.00 1.00 1.00 1.00 1.00
Profit margin2 14.25% 14.35% 15.03% 12.95% 13.08% 6.01%
Asset turnover3 1.42 1.35 1.17 1.21 1.42 1.51
Financial leverage4 1.45 1.52 1.50 1.55 1.37 1.34
Averages
Retention rate 1.00
Profit margin 13.93%
Asset turnover 1.35
Financial leverage 1.45
 
FCFE growth rate (g)5 27.25%

Based on: 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31).

2023 Calculations

1 Company does not pay dividends

2 Profit margin = 100 × Net income ÷ Net sales
= 100 × 516,822 ÷ 3,627,286
= 14.25%

3 Asset turnover = Net sales ÷ Total assets
= 3,627,286 ÷ 2,556,203
= 1.42

4 Financial leverage = Total assets ÷ Stockholders’ equity
= 2,556,203 ÷ 1,765,733
= 1.45

5 g = Retention rate × Profit margin × Asset turnover × Financial leverage
= 1.00 × 13.93% × 1.35 × 1.45
= 27.25%

FCFE growth rate (g) implied by single-stage model

g = 100 × (Equity market value0 × r – FCFE0) ÷ (Equity market value0 + FCFE0)
= 100 × (21,854,179 × 12.52% – 456,409) ÷ (21,854,179 + 456,409)
= 10.22%

where:
Equity market value0 = current market value of Deckers Outdoor Corp. common stock (US$ in thousands)
FCFE0 = the last year Deckers Outdoor Corp. free cash flow to equity (US$ in thousands)
r = required rate of return on Deckers Outdoor Corp. common stock

FCFE growth rate (g) forecast

Deckers Outdoor Corp., H-model

Microsoft Excel
Year Value gt
1 g1 27.25%
2 g2 22.99%
3 g3 18.73%
4 g4 14.48%
5 and thereafter g5 10.22%

where:
g1 is implied by PRAT model
g5 is implied by single-stage model
g2, g3 and g4 are calculated using linear interpoltion between g1 and g5

Calculations

g2 = g1 + (g5 – g1) × (2 – 1) ÷ (5 – 1)
= 27.25% + (10.22% – 27.25%) × (2 – 1) ÷ (5 – 1)
= 22.99%

g3 = g1 + (g5 – g1) × (3 – 1) ÷ (5 – 1)
= 27.25% + (10.22% – 27.25%) × (3 – 1) ÷ (5 – 1)
= 18.73%

g4 = g1 + (g5 – g1) × (4 – 1) ÷ (5 – 1)
= 27.25% + (10.22% – 27.25%) × (4 – 1) ÷ (5 – 1)
= 14.48%