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 the Firm (FCFF)

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 the firm (FCFF) is generally described as cash flows after direct costs and before any payments to capital suppliers.

Intrinsic Stock Value (Valuation Summary)

Deckers Outdoor Corp., free cash flow to the firm (FCFF) forecast

US$ in thousands, except per share data

Microsoft Excel
Year Value FCFFt or Terminal value (TVt) Calculation Present value at 12.52%
01 FCFF0 457,868
1 FCFF1 579,637 = 457,868 × (1 + 26.59%) 515,131
2 FCFF2 710,052 = 579,637 × (1 + 22.50%) 560,806
3 FCFF3 840,730 = 710,052 × (1 + 18.40%) 590,121
4 FCFF4 961,027 = 840,730 × (1 + 14.31%) 599,489
5 FCFF5 1,059,179 = 961,027 × (1 + 10.21%) 587,187
5 Terminal value (TV5) 50,554,982 = 1,059,179 × (1 + 10.21%) ÷ (12.52% – 10.21%) 28,026,632
Intrinsic value of Deckers Outdoor Corp. capital 30,879,366
Less: Mortgage payable (fair value) 0
Intrinsic value of Deckers Outdoor Corp. common stock 30,879,366
 
Intrinsic value of Deckers Outdoor Corp. common stock (per share) $1,203.02
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.

Weighted Average Cost of Capital (WACC)

Deckers Outdoor Corp., cost of capital

Microsoft Excel
Value1 Weight Required rate of return2 Calculation
Equity (fair value) 21,854,179 1.00 12.52%
Mortgage payable (fair value) 0 0.00 0.00% = 0.00% × (1 – 20.95%)

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

1 US$ in thousands

   Equity (fair value) = No. shares of common stock outstanding × Current share price
= 25,668,220 × $851.41
= $21,854,179,190.20

   Mortgage payable (fair value). See details »

2 Required rate of return on equity is estimated by using CAPM. See details »

   Required rate of return on debt. See details »

   Required rate of return on debt is after tax.

   Estimated (average) effective income tax rate
= (22.41% + 19.96% + 23.72% + 18.99% + 19.65% + 48.17%) ÷ 6
= 20.95%

WACC = 12.52%

FCFF Growth Rate (g)

FCFF 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)
Interest expense 3,442 2,083 6,028 5,046 4,661 4,585
Net income 516,822 451,949 382,575 276,142 264,308 114,394
 
Effective income tax rate (EITR)1 22.41% 19.96% 23.72% 18.99% 19.65% 48.17%
 
Interest expense, after tax2 2,671 1,667 4,598 4,088 3,745 2,376
Interest expense (after tax) and dividends 2,671 1,667 4,598 4,088 3,745 2,376
 
EBIT(1 – EITR)3 519,493 453,616 387,173 280,230 268,053 116,770
 
Short-term borrowings — — — 638 603 578
Mortgage payable — — — 30,263 30,901 31,504
Stockholders’ equity 1,765,733 1,538,825 1,444,225 1,140,120 1,045,130 940,779
Total capital 1,765,733 1,538,825 1,444,225 1,171,021 1,076,634 972,861
Financial Ratios
Retention rate (RR)4 0.99 1.00 0.99 0.99 0.99 0.98
Return on invested capital (ROIC)5 29.42% 29.48% 26.81% 23.93% 24.90% 12.00%
Averages
RR 0.99
ROIC 26.91%
 
FCFF growth rate (g)6 26.59%

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).

1 See details »

2023 Calculations

2 Interest expense, after tax = Interest expense × (1 – EITR)
= 3,442 × (1 – 22.41%)
= 2,671

3 EBIT(1 – EITR) = Net income + Interest expense, after tax
= 516,822 + 2,671
= 519,493

4 RR = [EBIT(1 – EITR) – Interest expense (after tax) and dividends] ÷ EBIT(1 – EITR)
= [519,493 – 2,671] ÷ 519,493
= 0.99

5 ROIC = 100 × EBIT(1 – EITR) ÷ Total capital
= 100 × 519,493 ÷ 1,765,733
= 29.42%

6 g = RR × ROIC
= 0.99 × 26.91%
= 26.59%

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

g = 100 × (Total capital, fair value0 × WACC – FCFF0) ÷ (Total capital, fair value0 + FCFF0)
= 100 × (21,854,179 × 12.52% – 457,868) ÷ (21,854,179 + 457,868)
= 10.21%

where:

Total capital, fair value0 = current fair value of Deckers Outdoor Corp. debt and equity (US$ in thousands)
FCFF0 = the last year Deckers Outdoor Corp. free cash flow to the firm (US$ in thousands)
WACC = weighted average cost of Deckers Outdoor Corp. capital

FCFF growth rate (g) forecast

Deckers Outdoor Corp., H-model

Microsoft Excel
Year Value gt
1 g1 26.59%
2 g2 22.50%
3 g3 18.40%
4 g4 14.31%
5 and thereafter g5 10.21%

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)
= 26.59% + (10.21% – 26.59%) × (2 – 1) ÷ (5 – 1)
= 22.50%

g3 = g1 + (g5 – g1) × (3 – 1) ÷ (5 – 1)
= 26.59% + (10.21% – 26.59%) × (3 – 1) ÷ (5 – 1)
= 18.40%

g4 = g1 + (g5 – g1) × (4 – 1) ÷ (5 – 1)
= 26.59% + (10.21% – 26.59%) × (4 – 1) ÷ (5 – 1)
= 14.31%