Deckers Outdoor CorporationDECKNYSE

Overview Intelligence Charts News Fundamentals Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $184.48 per share(market-calibrated)

+61.1%

Upside to Fair Value

Current

$114.51

Pure Model

$189.70

Fair Value

$184.48

Bull Case

$232.79

Bear Case

$151.02

Market Reality Check

Model Terminal Growth

3.00%

Market-Implied Growth

0.50%

Calibrated Growth

2.13%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $189.70.

What's Driving This Ratingfor DECK

✓

CapEx already efficient

CapEx at 1.36% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

✓

Premium margins already priced in

EBIT margin of 31.89% is already well above sector average. The model holds this level — there's limited room for margin expansion to drive upside. Valuation depends primarily on revenue growth.

→

Moderate revenue growth

Analyst consensus projects 9.06% revenue growth, fading to 3.00% by Year 10. Revenue reaches $8.2B (vs $5.0B today).

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $159.90/share (15.8x terminal FCF) while exit multiple gives $219.51/share (27.1x terminal FCF). The 20x EV/EBITDA exit reflects current market multiples, while the perpetuity method with 3.00% growth is more conservative. The base case averages both methods.

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 250bps below the model's 3.00%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 73.70% indicates efficient cash generation. FCF reaches $2.0B by Year 10 (24.26% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.15

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)9.66%

Cost of Debt

Pre-tax Cost of Debt1.27%

Tax Rate22.30%

After-tax Cost of Debt0.99%

Equity Weight (E/V)98.43%

Debt Weight (D/V)1.57%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (98.43% × 9.66%) + (1.57% × 0.99%)

= 9.52%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$5.4B	$6.2B	$6.7B	$7.4B	$8.2B
EBIT	$1.7B	$2.0B	$2.1B	$2.4B	$2.6B
Tax	$387M	$443M	$479M	$525M	$581M
NOPAT	$1.3B	$1.5B	$1.7B	$1.8B	$2.0B
+ Depreciation	$56M	$64M	$70M	$76M	$85M
- Capex	$74M	$85M	$92M	$101M	$111M
- Δ NWC	$29M	$26M	$22M	$20M	$15M
Free Cash Flow	$1.3B	$1.5B	$1.6B	$1.8B	$2.0B
Discount Factor	0.913	0.761	0.635	0.529	0.403
Present Value	$1.2B	$1.1B	$1.0B	$944M	$799M

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$2.0B

Terminal Growth Rate3.00%

WACC9.52%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$31.3B

PV of Terminal Value$12.6B

Exit Multiple Method

Year 10 EBITDA$2.7B

Exit Multiple (EV/EBITDA)20.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$53.8B

PV of Terminal Value$21.7B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$10.1B

PV of Terminal Value$12.6B

Enterprise Value$22.7B

(-) Net Debt-$1.6B

Equity Value$24.3B

Shares Outstanding152M

Price per Share$159.90

Exit Multiple Method

PV of Projected FCFs$10.1B

PV of Terminal Value$21.7B

Enterprise Value$31.8B

(-) Net Debt-$1.6B

Equity Value$33.4B

Shares Outstanding152M

Price per Share$219.51

Pure Model Fair Value

$189.70

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	2.00%	2.50%	3.00%	3.50%	4.00%
7.52%	$227.68	$233.80	$241.28	$250.62	$262.62
8.52%	$203.32	$207.30	$212.00	$217.63	$224.52
9.52%	$183.84	$186.56	$189.70	$193.37	$197.70
10.52%	$167.73	$169.67	$171.86	$174.37	$177.27
11.52%	$154.09	$155.51	$157.10	$158.89	$160.92

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$151.02

31.9% vs current

• -25% vs analyst consensus
• Terminal growth: 2.5%
• Beta: 1.43

Base Case

$189.70

65.7% vs current

• Analyst consensus
• Terminal growth: 3.0%
• Beta: 1.15

Bull Case

$232.79

103.3% vs current

• +25% vs analyst consensus
• Terminal growth: 3.5%
• Beta: 0.97

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Consumer Cyclical Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth9.06%

Year 3 Revenue Growth7.05%

Year 5 Revenue Growth5.38%

Year 7 Revenue Growth4.43%

Year 10 Revenue Growth3.00%

Terminal Growth Rate3.00%

Margin & Efficiency

Current EBIT Margin31.89%

Tax Rate22.30%

Historical Capex / Rev1.36%

NWC / Revenue6.41%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 20x EV/EBITDA (Consumer Cyclical sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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