We recently published a list of 10 Stocks That May Be Splitting Soon. In this article, we are going to take a look at where Deckers Outdoor Corporation (NYSE:DECK) stands against the other stocks that may be splitting soon.
Understanding Stock Splits
A stock split is when a company literally splits its stocks – it divides its existing shares into multiple new shares. This increases the number of shares outstanding without changing the company’s overall value while making the stock more affordable and accessible to smaller investors.
A company’s board of directors determines the ratio of a stock split. This can range from a common 2-for-1 split, and go as far as 100-for-1, or more. For instance, in a 2-for-1 split, each existing share is divided into two new shares. The price per share is reduced by half, but the total market capitalization remains unchanged. So, a stock split can increase liquidity and potentially attract more investors, by giving 2 shares valued at $50, instead of 1 at $100, and the company’s market cap is not impacted.
As the share price adjusts downward, dividends per share will also be adjusted to maintain the same total dividend payout. Similarly, all things tied to the share price are adjusted according to the split. However stock splits are non-dilutive, so existing shareholders’ voting rights remain unchanged.
Stock splits aren’t just beneficial to small investors trying to buy shares in big companies, they can also benefit companies by allowing them to repurchase shares at a lower price. But in one way or another, the eventual goal is to enhance a stock’s appeal to investors and make it more accessible to retail or individual investors.
At the end of the day, a stock split does not inherently create additional value for a company, a good company remains a good company after a stock split. Similarly, a bad company remains a bad company. A temporary reduction in share price followed by higher investor interest might cause the stock to surge in the short run, but no meaningful impact should be expected in the long run.
Experts Weight In on The Market Situation Right Now
We’ve seen a range of high-profile stock splits in 2024, especially in the semiconductor space. They seem to be the new cool thing to do for every company. However, these moves should be treated as no more than just making shares more accessible to smaller investors, and value investors should focus on fundamentals when they’re contemplating their next best idea.
The markets have been on a wild ride, all thanks to AI. The valuations have gotten out of hand, but we’ve also seen some corrections. Analysts are expecting earnings growth of 15% in 2025 along with rate cuts of up to 225 basis points. The Fed is expected to deliver its first cut in September after hiking interest rates constantly and holding them higher for longer. Jeff Krumpelman, the chief investment strategist at Mariner Wealth Advisors, and Julie Biel, the chief market strategist at Kayne Anderson Rudnick, recently appeared together on CNBC to discuss these dynamics and both had similar but contrasting opinions.
Krumpelman expressed optimism, citing strong fundamentals and improving economic indicators, particularly inflation. He believes we’re not in a recessionary scenario and sees potential for the S&P 500 to reach 6,000 by mid-2025, driven by solid earnings growth, healthy guidance, and projected GDP growth of 1.5% to 2.0%. Here’s what he said:
“We look at the individual stocks, we find a broadening market, and we find general health in terms of earnings growth and valuation. So, we’re optimistic and constructive.”
Biel, on the other hand, raised concerns about potential risks related to high valuations making stocks more fragile. She emphasized that the last time the market was this optimistic was back in 1984, just once in modern history. Biel remained cautiously optimistic and pointed to the $1 trillion in credit card debt and rising delinquency rates.
Most successful companies have a history of stock splits, but their share prices consistently return to levels where another split is warranted. Yet it is a widely practiced phenomenon and investors globally anticipate such moves from big companies to improve trust. In this context, we’re going to talk about the top 10 stocks that may be splitting soon.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A customer browsing a retail store, finding the perfect footwear for their casual outfits.
Deckers Outdoor Corp. (NYSE:DECK)
Share Price as of August 30: $941.43
Number of Hedge Fund Holders: 52
Deckers Outdoor Corp. (NYSE:DECK) is a global footwear designer and distributor renowned for its iconic brands UGG Australia, Teva, and Sanuk. They offer a range of footwear for various activities, from casual wear to outdoor adventures, with a focus on comfort.
In the first quarter of 2025, the company recorded a 22.13% year-over-year improvement. This translated into a revenue of $825.35 million, which was $19.17 million higher than analyst estimates for the quarter. The earnings per share were $4.52.
HOKA footwear brand running shoes was the main growth driver, rising 30%. UGG also experienced growth, increasing 14%. Both D2C and wholesale channels saw increases of over 20%, demonstrating strong demand across the US and global marketplace, particularly in China and EMEA. International regions increased by 21% overall. These impressive results give the company confidence in its updated outlook for the fiscal full year 2025.
HOKA’s performance was driven by compelling product assortment, including new launches, and growth of continued designs. The brand is expanding its distribution through its global marketing campaign, FLY HUMAN FLY.
UGG revenue increased due to strong full-price selling of key iconic franchises. In addition to product development and marketing activations. The brand’s upcoming Feels Like UGG campaign will further enhance its consumer connections.
Both UGG and HOKA brands are well-positioned for continued growth in the future. The company also has other footwear brands like Teva, Sanuk, and Koolaburra, which have exhibited a combination of increases, declines, and flat sales. The brand’s focus on innovation and consumer-informed product development has contributed to its success
In just 1 year, this company saw a surge in its stock price by 81.44%. Given that it has used stock splits as a way to deal with stock price surges to improve investor interest, another stock split may happen for Deckers Outdoor Corp. (NYSE:DECK). So far, investors seem to trust this company, as it is held by 52 hedge funds. The largest stakeholder is Millennium Management, with a position of $226,316,390.
FPA Queens Road Small Cap Value Fund stated the following regarding Deckers Outdoor Corporation (NYSE:DECK) in its Q2 2024 investor letter:
“Deckers Outdoor Corporation (NYSE:DECK) is a footwear and apparel company that owns the UGG, Hoka, Teva, Sanuk, and Koolaburra brands. We think management has done a terrific job growing and extending the UGG franchise. Now they are replicating that success with Hoka running shoes, which surpassed $1 billion in sales in 2023. At over thirty times forward earnings (as of June 30, 2024), we have weighed Deckers’ valuation against the quality of its management team, strong brands, and net cash balance sheet and have trimmed our position. We first bought a small position in Deckers in 2015 and 2016 when the company was struggling with supply chain issues. Its stock price has increased more than ten times since then because of excellent operating performance, and we have trimmed all the way up. Given the company’s exceptional financial performance and growth, the stock trades on the higher side of our “range of reasonableness” and we have continued to trim accordingly.”
Overall DECK ranks 6th on our list of stocks that may be splitting soon. While we acknowledge the potential of DECK as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than DECK but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
