By Trefis Team

CHONGQING, CHINA - MARCH 29: A woman pushes a stroller past a UGG retail store in a shopping mall, highlighting the brand's vibrant presence in China's retail market. On this day, Deckers Outdoor showcased its latest seasonal collection with an inviting storefront display, attracting shoppers in Chongqing, China. This bustling atmosphere underscores the brand's commitment to engaging consumers, despite the considerable challenges the company currently faces.

Deckers Outdoor Corporation (NYSE: DECK), widely recognized for its popular UGG footwear and lifestyle products, has encountered serious volatility in its stock performance, witnessing a staggering 50% plunge in its share price this year alone. This alarming decline raises concerns for investors who are closely monitoring the companys market performance. However, a look back at historical trends reveals that such fluctuations are not uncommon for this footwear leader.

For instance, during the inflation spike of 2022, Deckers stock experienced a substantial drop of 48%. Similarly, in 2020, amid the uncertainties brought about by the pandemic, the stock suffered a decline of 55%. The most dramatic downturn occurred during the financial crisis of 2008-2009, when Deckers lost an astounding 77% of its value. These historical patterns indicate that the company has weathered significant storms before and may have the resilience to do so again.

For investors seeking more stable and potentially lucrative investments, the Trefis High Quality portfolio emerges as a promising alternative. This portfolio strategy has yielded impressive returns, exceeding 75% since its inception, as evidenced by its robust performance metrics.

Despite the current negative sentiment surrounding the market, Deckers' underlying business fundamentals remain strong. At present, DECK stock is trading at a price-to-sales (P/S) ratio of 3.3, which is close to the S&P 500 average of 3.2 and below its own three-year average P/S ratio of 3.8. From a valuation perspective, Deckers has established itself as a $15 billion company able to generate $1 billion in free cash flow, translating to a yield of 6%a rate that substantially surpasses typical bank savings rates. Additionally, with an annual growth rate approaching 20%, the long-term investment potential for Deckers becomes increasingly compelling.

Moreover, Deckers has a historical track record of not only surviving but thriving after significant downturns. While uncertainty looms in the short term, the companys strong brand portfolio and solid financials offer a sturdy foundation for a rebound once market sentiments begin to shift. Its worth noting that markets can exhibit irrational behavior for extended periods, particularly during times of heightened fear and uncertainty.

For long-term investors who can remain patient and disciplined, the current DECK sell-off may represent a valuable opportunity to invest at a lower price point. Conversely, those who are averse to volatility might consider exploring a more hedged investment strategy or diversifying their portfolios. The Trefis Reinforced Value Portfolio, which has consistently outperformed its all-cap benchmark comprising the S&P 500, S&P MidCap, and Russell 2000 indices, is one such option. Seeking guidance from a financial advisor experienced in navigating bear markets could also provide valuable insights.

Ultimately, building wealth often requires a calm and strategic approach, particularly during turbulent market conditions.