Thanks to Sergio for the following analysis of DECKERS.  This is part of an on-going discussion that, hopefully, we'll get into a database so we can all see it all in one place.  Working on it.  

My comments follow.

Deckers quick eval

 Meaning

Their business description reads: “Deckers Outdoor Corporation is a designer, producer, marketer, and brand manager of innovative, high-quality footwear and accessories.

They started with what today is still their main product: the Sheep skin boot called UGGs. They also have a number of other brands and shoe lines and apparel.

Stuff that you and I use everyday. But I never owned any of their products to date

Moat

Even though I didn’t know the boots my self, my wife tells me she loves them. In California everyone wears them everywhere (we live in NY, she noticed when we went on vacation) and she wanted to buy one but they were damn expensive and SHE DOESN’T DO EXPENSIVE! (all news to me). But she would never buy the cheaper substitute…so she never bought a pair! 

I think that means Brand/Moat is there…

Management

The CEO Angel R. Martinez has been with the company since 2005 and was the Executive Vice President and Chief Marketing Officer, Reebok International Ltd. Chief Executive Officer and President, The Rockport Company before that.

The COO and CFO also have experience but I didn’t dig in deep on how they run the company and their corporate culture after I found these red flags:

Red Flags

-A lot of insiders selling at the moment but to me that doesn’t represent too much

- 80% of the revenue comes from 1 line of products, the UGGs boots

- UGGs  market is starting to slow down after many years of Jennifer Aniston and other celebs randomly wearing it for leisure.

- Sheep skin cost will rise 40% this year squeezing margins and management expects a growth of only 15% ahead

-Competidors like Bearpaw (http://www.bearpawshoes.com/us.shtml) are cutting in on their share of the market with much cheaper synthetic sheepskin.

So my valuation has to be very conservative since they won't be able to keep up with those great numbers

EPS (yahoo finance) = 5.07

Growth (conservative) = 12%

Future EPS goes to = 15.75

Future P/E (double growth) = 24

MARR  15%

MOS 50%

Sticker Price = $93.42

MOS Price = $46.71

Price right now at $67.91 

Pay back time is good at 6 years but some analysts are placing their target price at $65!

Sergio, I'd say there are two issues with this valuation analysis.  The first is the question of future revenue to replace the old Ugg boots.  The second is that the 6 year Payback Time has been discounted because analysts are placing a different bet.  

I am not interested in buying this company if I think they are going to be a two trick pony.  They ran with Tevas for year.  Then they ran with Uggs for years.  Now they have Sanuks they hope to run for years with.  Deckers is nothing if it can't continue to load its distribution pipeline with new product invented by someone else.  That's their MO.  They either win or lose with it.  

The problem with that MO is that, like Apple, its more than a little bit dependent on great management decisions about which product to allocate the capital to.  Steve Jobs focused Apple on the right four things out of about 400 that Scully was working on.  Can Tim Cook do it as well?  That's the Apple question. Same question here: Will Martinez do it as well?  So here's the real problem for Deckers and Apple: Can these companies survive an idiot running them because someday an idiot will.  That's the question you have to answer to buy either one.

As to valuation, if you've got good numbers, brother, and you can buy a wonderful public company with a 6 year payback time, forget the analysts and buy it.  If you've got good numbers.  If its wonderful.

Now go play