Shares of footwear and apparel company Deckers Outdoor (NYSE: DECK) soared on Friday following the release of financial results for its fiscal third quarter of 2024. The company achieved record financial results during the quarter, which has sent the stock to a new all-time high this morning. As of 10 a.m. ET, Deckers stock was up 14%.
Deckers' record quarter
Deckers owns multiple well-known brands, including Hoka and UGG. Its Q3 ended in December. And during the quarter, the company generated record revenue of $1.56 billion, which was up 16% year over year. Its outperformance in Q3 motivated management to raise its full-year net-sales guidance from $4.025 billion to $4.15 billion.
Equally impressive were Deckers' profitability metrics. The company's Q3 gross profit margin jumped from 53% in the prior-year period to almost 59% in Q3. Likewise, its operating margin improved, sending its operating income up by almost 35% to $488 million.
Deckers consequently raised its full-year profit margin guidance in light of its strong Q3 results.
Can the good times continue for Deckers stock?
As of this writing, Deckers stock is up more than 1,000% in the last 10 years, handily beating the market. It's worth noting that the price-to-sales valuation for the stock has soared to an all-time high as well today, which means that from this one valuation vantage point, Deckers stock has never been more expensive.
DECK PS Ratio data by YCharts
Therefore, it would seem that there is some valuation risk with Deckers stock today. Moreover, the company will soon experience a leadership shakeup, which can also introduce some execution risk. CEO Dave Powers joined Deckers in 2012 but will retire in August. Chief commercial officer Stefano Caroti will take Powers' place.
Given the high valuation and changes in leadership, I personally wouldn't buy Deckers stock today. But that doesn't take away from the company's impressive quarter and ongoing profitable growth.
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Jon Quast has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
