Deckers Outdoor exhibits promising growth with substantial ROCE increase

Deckers Outdoor (NYSE:), a renowned footwear company, has recently shown significant signs of growth, underpinned by an impressive return on capital employed (ROCE) and an expanding capital base. The company’s escalating ROCE suggests that it is profitably reinvesting its earnings at an increasing rate.

As of the trailing twelve months to June 2023, Deckers Outdoor’s ROCE stands at a notable 32%, which is a marked increase from its previous returns. This metric, which provides an insight into the annual pre-tax profit relative to the capital utilized in the business, is substantially higher than the industry average of 13%. This indicates that Deckers Outdoor is generating more earnings per dollar of capital invested compared to other companies in its sector.

Over the past five years, Deckers Outdoor’s ROCE has seen a considerable increase, reaching 32% from previously lower levels. Concurrently, the capital employed in the business has grown by 105%, indicating successful reinvestment of profits.

Deckers Outdoor’s consistent ability to grow its returns on capital and reinvest effectively is a trait highly sought after by investors. Over the past half-decade, shareholders have witnessed a remarkable return of 371%, suggesting investor recognition and endorsement of these positive changes.

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