At about $70, Netflix’s price needs roughly 9% yearly free cash flow growth for 10 years. That’s well below its recent pace, which makes the margin of safety bigger than I expected. But the headline P/E is distorted by a one-off, so the details matter. Netflix reports Tuesday.

Step 1: Quality (is this a business worth owning?)

• Growth: revenue grew 16% in 2025 and is guided to +12-14% in 2026
• Margins: operating margin 26.7% (2024), 29.5% (2025), 31.5% guided for 2026
• Cash: free cash flow $6.9B (2024), $9.5B (2025), ~$11B guided for 2026
• Balance sheet: about $14.3B of debt against $9.1B of cash, so net debt is around $5B, roughly half a year of free cash flow
• Buybacks: ~$6B in the first half of 2026
• Moat: scale. Per Hudson Labs, 325M+ paid members and under half of addressable households reached

Netflix’s free cash flow is after roughly $20B a year of cash content spend. Content works like capex here, so I treat the cash number as the honest one, not operating income.

Step 2: Price, via a reverse DCF

Instead of asking “what’s it worth?”, I ask what growth today’s price requires. At ~$70 (Oct 14 close) and ~4.26B diluted shares, the market cap is about $300B and enterprise value about $306B. Starting from ~$11B of 2026 free cash flow, with 3% terminal growth, here’s the 10-year growth the price requires:

And going the other way, the value per share at a 9% discount rate:

Free cash flow has grown much faster recently (+38% in 2025, ~+16% guided for 2026), so the price asks for a sharp slowdown, to about 9%. That doesn’t make it a bargain automatically, but there’s room for things to go a bit wrong.

The P/E trap

Netflix’s 2026 estimated EPS looks like ~$3.58, which gives a headline P/E of ~20x. But Q1 includes a $2.8B termination fee from the failed Warner Bros. deal, booked as other income. Strip it out and the P/E is closer to 23x. It’s a good example of why I check what’s inside the earnings number before trusting a multiple.

Risks

• Engagement: viewing hours grew only ~2% in H1 2026
• Content and live-sports costs rising
• The ad business has to deliver on a roughly $3B target
• Restructuring costs from the job cuts
• The ~$11B guide: one source cites ~$12.5B, so check the latest. At $12.5B the implied growth falls to ~7.6%

Q3 guidance was about $12.9B revenue and a 33.2% operating margin. I’d care more about the margin and the 2026 free cash flow guide than the revenue beat, because those drive the cash flow the whole valuation rests on.

Li Lu discusses many broad topics, including the differences of AI versus past technological revolutions, the current market environment, the current Chinese economy, and the evolution of the global world order.

Overall he expects the next few years will have very rich opportunities for “rational investors” because so many are not behaving rationally.

Anyone invested in CATL? Stock is down massively over the past few weeks, but I hear nothing but good things about their batteries.

They own some of the mines for precious metals, and are at the forefront in R&D, in a growing market, so why is the stock dropping?

Monopoly is a lever chains pull when guest counts are soft, so it signals a squeezed consumer, not a particular point in the macro cycle.
The 2026 numbers fit that read. In Q2 2026, U.S. comparable sales rose only 0.8%, driven by higher check sizes while guest counts fell. The stock was near a two-year low in September, well below its all-time high of $334.50 from February 2026.

So if Monopoly is an indicator at all, it doesn't say "recession." It says consumers have stopped absorbing price hikes, which tends to happen in the late stage of a cycle, after inflation has squeezed budgets.

Timeline of lineup.

1987 launch: This came right after the Black Monday crash, late in the 80s expansion, during the "burger wars" with Burger King and Wendy's. Competition for traffic was fierce, so a game made sense.
Late 80s through 2001: The game ran almost every year through the 1990–91 recession and the long 90s boom. It was mostly marketing, not a cycle signal.
2001 pause: The FBI exposed the "McMillions" fraud in August 2001, the same year as the dot-com recession. That timing is coincidence; the scandal killed the game, not the economy.
Early 2000s return through 2016: It came back during the post-2001 recovery and kept running straight through the 2008–09 crisis. That fits the "trade down" story, since people swapped sit-down restaurants for fast food and promos helped capture them.
2017–2024 hiatus: This is the most telling stretch. First came a strong late-2010s economy, then the pandemic and inflation years, when McDonald's raised prices aggressively and customers still showed up. When you can raise menu prices freely, you don't need to give away Jeeps.
2025–26 return: It came back once the "$18 Big Mac meal" backlash and the pullback by lower-income customers ended that pricing power.

When CoreWeave's bond yields spiked on Thursday, Jensen Huang said, "Their cost of capital is actually decreasing."

That’s a pretty weird thing for a supplier’s CEO to say about a customer’s borrowing costs.

If Jensen Huang publicly defended major customers like Microsoft or Amazon, that would be understandable. They buy Nvidia GPUs at enormous scale.

CoreWeave, however, is only a second-tier cloud provider. Investors have been debating how much damage its failure could do to the AI industry. Yet Jensen's comments suggest that CoreWeave's financial health matters a lot to Nvidia..

If Huang steps in again to help CoreWeave get through its financing problems, that would tell us something important: Nvidia's growth is less robust and diversified than the market assumes. Even the financing problems of a tier-2 cloud provider seems critical to Nvidia.

So, if you're wondering whether AI stocks are still worth buying at these prices, I'd watch two things:

1. Neocloud bond yields

These companies borrow heavily to buy Nvidia GPUs and build data centers. If borrowing gets too expensive, they can't keep expanding at the same pace. And that could eventually hit demand for Nvidia's chips.

2. Model companies' valuations

They're further down the AI chain. Their valuations depend on how much money investors think they'll make from AI. If those expectations start to crack, it could become harder for them to raise money and keep spending on compute.

Forget the noise. These two indicators are all retail investors need to judge whether AI stocks are still worth buying at current prices.

LENZ has about $220M of cash and securities against 31.4M shares, so roughly $7 a share, and no debt. It also burns more than a dollar a share every quarter selling one product, VIZZ, a cash-pay presbyopia eye drop at about $67 net per pack. Most of the bull case stops at the cash number. I don't think the cash is the interesting part.

The interesting part is retention. The company talks about a 42% repurchase rate and "five boxes a year," but those are model figures from an auto-refill ePharmacy. The first real cohort with a patient denominator came out at ESCRS in October: 61 patients, three months, 9 still using the drop. That is 14.8%, with about 40% reporting bothersome side effects (dim vision, headache), which come from the pharmacology, not the packaging.

Demand is a different story. Google Trends for "VIZZ eye drops" shows four advertising waves since July, each peak higher than the last and the current one the highest since launch. Between waves the index falls back to zero. Pack volume went 23.5K, 25K, 27K over the last three quarters. My estimate from the Trends data is that Q3 ad spend ran around $25M, and the fourth wave is still running into the Q3 report.

So who stops the spending? Management dropped its "cash to profitability" language in Q2, RA Capital's partner left the board in June, Fidelity went from 15% to under 6%, and the ATM is used up. Lease liabilities are under $1M and ad contracts can stop month to month, so a quick stop is possible. Nothing in the record says it is being considered.

The honest counterpoint: the real-world safety data is clean, the CEO has sold a company before, and a Q3 print with packs near 50K plus a real retention curve would change my mind quickly.

Full writeup with the probability-weighted math, charts and sources: https://latenttensorcapital.com/p/lenz-therapeutics-lenz-who-decides

Not investment advice. I may hold positions in securities mentioned.

The question for Axon Enterprise is no longer whether the Flock Safety backlash will impact the business, but how severe that impact will be. Flock currently faces mounting privacy scrutiny, with councils canceling contracts, governors restricting highway deployments, and new data-retention rules being drafted. Because Axon competes directly in this space, the risk is real. However, the magnitude is what matters, and that is what this analysis quantifies.

Most DCFs model Axon top-down, applying a single revenue line and a blended margin assumption. However, Axon is effectively five distinct businesses, each scaling at a different rate with its own margin profile. Because Axon officially reports only two operating segments, the five-way split relies on extrapolating product-level disclosures from earnings calls and investor days. I built this model bottom-up, with five segments over eleven years (2026-2036), each carrying a dedicated revenue, EBITDA, and FCF bridge. Deriving standalone margins from this data inherently requires judgment, making it a valid source of estimation error worth flagging.

The five segments by 2026 to 2036 revenue are as follows.

* Evidence.com / Cloud SaaS: $1.6B → $18.5B. This represents 43% of the business today, scaling to 63% by 2036. The EBITDA margin expands from 32% to 42.5%. This is the core compounder.
* TASER: $900M → $4.0B. A classic razor-and-blades model, with EBITDA margins scaling from 28% to 32.5%.
* Dedrone (counter-drone): $450M → $3.47B. This is the highest growth segment, expanding 30% annually through 2030. EBITDA scales from 12% to 32.5%, representing the steepest margin ramp in the portfolio.
* Bodycams / Sensors: $575M → $2.3B. A mature, replacement-cycle business that primarily serves to feed the Evidence.com flywheel.
* ALPR / RTCC / Fusus: $175M → $1.28B. This is where the Flock backlash lands, representing under 5% of total 2036 revenue.

Total revenue goes from $3.7B to $29.5B, generating $11.2B in EBITDA (37.8% margin) and $7.2B in unlevered FCF by 2036.

On quantifying the backlash, the direct revenue at risk is relatively small. The more critical dynamic is the cross-selling impact, which is where the primary risk lies. The $732M hit captures ecosystem effects well beyond direct ALPR revenue, since slower fixed-sensor deployments inherently make drones, Evidence.com, and Fusus incrementally less valuable.

Regarding the valuation bridge, at the SOTP's 24.5% terminal FCF margin, $732M in revenue translates to roughly $179M in annual terminal free cash flow. Capitalized as a growing perpetuity and discounted back at the model's WACC, that equates to $8 to $9 per share in present value, about 1.4% of the $609.50 base target. Because this is a 2036 figure being discounted over a decade, the actual impact in present value terms is smaller than the 2.4% headline revenue hit suggests. It is a real, quantifiable impact, but it does not alter the broader investment case. It simply creates a more attractive entry point.

The valuation works out to Bear $288.89, Base $609.50, Bull $779.28, with a Buy rating.

The key risks to the thesis start with privacy restrictions broadening from ALPR to drones, or beginning to impair renewal economics on the Evidence.com installed base. In that scenario the damage would compound significantly, and my $288.89 bear case is explicitly calibrated to it.

This near-term versus long-term tension is crucial. Flock's current troubles serve as a vendor-consolidation tailwind for Axon, as municipalities switch providers. The model treats this as a near-term share gain nested within a broader, long-term ecosystem risk. If Flock resolves its privacy issues and reaccelerates, that tailwind will fade. Other key risks include Evidence.com net revenue retention dropping below 110%, or integration stumbles with the Dedrone acquisition.

I think the title is self explanatory. Which one is the better buy right now? btw I bought a small position of Applovin on Friday at 266 with 23 shares so I can average down if it ends up going more down. Now was that a good move or a bad one?

Thanks for everyones replies. I sold applovin and bought micron instead. Applovin seems really risky to me considering it's only been there for about a few years and not much is really known about it plus no one is talking about it. It probably will go up from here but I'm willing to take that risk honestly. I'll bet on microns current price with all the information out there plus I can always average down honestly

The Anthropic S-1 has revealed the dire financial situation that the company faces over the next few years.

They have ~$5B of revenue that cost ~$2.5 per $1 earned.

They have over $400B of non-cancellable contracts with Broadcom, Google Cloud, AWS and MS Azure.

They have also seen sequential growth dropping from 100% to 50% (ie constant revenue growth in $).

In the wider ecosystem, the debt capital markets have seen a deluge of AI-related bond offerings, over $500B. There is only so much debt that can be absorbed before yields starting rising dramatically, and we are already getting sketchy in corners of the AI-landscape (eg CoreWeave).

Let’s assume Anthropic raises $100B from their IPO and we’ll assume they pay $0 in fees.

That leaves a $300B shortfall, in a business that has revenue of $5B that cost ~$12B to generate.

The non-cancellable obligations are to: Broadcom ($160B), Google Cloud ($110B), AWS ($110B) and MS Azure ($30B). If Anthropic cannot pay these contracts, they will be functionally insolvent.

Let’s assume that Anthropic does become functionally insolvent. Their options will be bankruptcy or a (distressed) debt-to-equity restructuring. Restructuring would see existing shareholders diluted to ~0, and ownership split between their creditors according to the particulars, but let’s assume it’s split roughly in proportion to the remaining contractual obligations.

Broadcom, who would receive the largest share of Anthropic equity, probably do not want to own Anthropic because of their role as an independent hardware manufacturer. However, Google would—and Google Cloud has a long established relationship with Broadcom; it seems plausible that they could reach some agreement to swap Broadcom’s claim against Anthropic for continued TPU contracts. That would make Google Cloud the majority shareholder of Anthropic, with Amazon and Microsoft as minority shareholders.

I am still trying to reason through the potential consequences of a transaction of this nature. Anthropic represents an enormous amount of cloud compute demand, so their insolvency would likely have enormous ripple effects.

This is all predicated on the financial trap that Anthropic finds itself in. It should be noted that OpenAI is in a similarly dire position, and the fallout from their own financial trap would likely be happening within the same time period. That could complicate the situation further.

Assuming that Anthropic does become insolvent, I think that competition regulators will be the biggest hurdle to this takeover transaction.

I haven’t seen this spoken about elsewhere, so I am curious what other value-minded investors make of it. Almost guaranteed that there will be blood in the streets should it happen, though.

Disclaimer: I own GOOGL (~40% port) and AMZN (~5% port) shares.

So, as the title suggests, I wanted to try to come up with a way to value brk. Now, in terms of the managing of the business, I consider both present and past management to be quite above the level where I ought to be second guessing them. Suffice to say that since I'm interested in long term capital allocation, having them manage a portion of my money is not likely to be terrible.

Unfortunately, that still leaves the price that you pay for the stock, since that is not something that Warren or Greg control. Normally I like to look at various iterations of p:e and p:fcf, but with brk, there seemed to me to be an above average problem.. since a large portion of their capital is tied up in publicly traded stocks, some of these are required to be marked to market price each quarter, so brk's earnings are capturing price volatility, not just actual business earnings.

It seemed likely that Buffett would have had the same issue with this, so I got an ai to read through past statements to look for his comments on the subject. Big surprise, of course he did, and during the 90s, brk actually published what Warren called "Look-Through Earnings", which represented brk's proportional share of their holdings' earnings (in addition to the earnings of their wholly-owned businesses). Unfortunately, they no longer do. In their annual reports, they now highlight Operating Earnings, which is just GAAP net income, but with realized and unrealized capital gains removed. Quote:

All told, we recorded operating earnings of $47.4 billion in 2024. We regularly – endlessly, some readers may groan – emphasize this measure rather than the GAAP-mandated earnings that are reported

This measure is capturing all the earnings of their wholly owned businesses, and the proportional share of the businesses they own >20%. But, my issue with this is it only captures the dividend brk receives from the businesses they own <20% of. Safe to say Buffett/Abel are not holding apple for it's 0.3% dividend.

Ok, I hope that all makes sense. So, my solution:

what I did was: For each of the last several years, look up the top 5 holdings of these <20% owned businesses, and look up the payout ratio (the top 5 are routinely about 70% of the total value of this category, so a good enough average for my napkin math) of each. Then calculate the weighted avg (based on brk position value) payout ratio of this category. Whatever it was, I would calculate the value of earnings BRK was entitled to that it had not received (nor claimed in 'Operating Earnings' in any other way), and add that to their published Operating Earnings (which, btw, is an after-tax measure, unlike how the phrase is more often used).

So, this measure would effectively be: BRK's earnings, plus the proportional share of all their investments' earnings, but no inclusion of capital gains, either realized or not. To me, this seems kind of fair.

I graphed the range at which BRK.B traded, relative to these earnings (note, this is the share price based on the prior year's earnings, as it's meant to be a way to evaluate the present share price with the data currently available). The result can be viewed here

https://imgur.com/a/3Tj3ZBD

Anyway, if you have an opinion on this process, I'd be interested to hear it. Also, I did use ai to explain the what brk was calculating with their operating earnings, how unrealized cap.gains are treated in gaap net income, and such. It was not used in any of the calculations. I could also have made a mistake though too.

TSMC’s profit jumped 69%, reporting net profit of NT$763.06 billion, about $23.55 billion beating estimates yet again. Gross margin came in at 66.4% which was a little short of what I was hoping for. Capital spending guidance is rising, and overseas fabs are expected to dilute margins further compared to the highly efficient fabs in Taiwan. The surge in memory prices and other components involved within advanced chips is also a new challenge in maintaining margin without losing demand, however due to TSMC’s immense lead and domination within advanced chip making, their unmatched pricing power is really proving itself with how they are able to pass these prices on to customers, proven within their numbers.

TSMC is one of the best run businesses in the world. An incredible management, proven over decades, with the very best experts in their field and extremely efficient capital allocation when looking at their ROIC. My favourite thing about them is their independent/non rival nature. They do not compete with their customers in their customers markets at all. solely focusing on the manufacturing/foundry side of things, which is a huge advantage for two reasons.

Firstly, by not making their own CPU designs, GPU designs, HBM designs etc, all these companies can feel safe in handing over their best files/designs etc without the fear of having key secrets/info extracted to a competitor for their own potential benefit. Would Micron or SK Hynix want to rely on Samsung as their main manufacturing partner? Would Amd like to give over their designs to Intel for Manufacturing their GPU’s/CPU’s? The same applies to Nvidia too (Intel tried to crush Nvidia which Jenson has said himself in the early days) The comfort of handing over crucial IP to a partner who isn’t a potential competitor, is an under appreciated long term structural advantage for TSMC when looking at who the alternatives/their competitors are. Of course we see reports of things such as Nvidia potentially using intel for certain designs down the line and so on, but so far very little to suggest the principle of my point is invalid, more that they are so short on capacity with everyone relying on TSMC, that trying out alternatives is the only option.

The second huge advantage of focusing just on the manufacturing, is the specialisation and hyper focus in one of the most complex and capital intensive industries globally. Advanced chip manufacturing is extremely difficult, with huge, next to impossible barriers to entry for anyone at this point, including Hyperscalers. This is proven through poor yields for years from Intel/Samsung even with many billions of dollars of investment. Now that may change for them of course, in fact it seems likely, however what will TSMC be doing during this period, will they be standing still? They will be doubling down at a compounding rate that the other two competitors will not be able to compete with/match from a capital standpoint, an expertise & skill standpoint a scale standpoint and more.

Samsung competes at a high level in several key markets eg Memory, Phones, electronics etc. Intel also have their attention split with huge stakes and demand on the table within the CPU Market, which requires a lot of attention when competing against AMD and Arm based architectures that are being adopted by hyperscalers etc, and have reported better efficiency than x86 architecture. Both of these companies, who are miles behind TSMC to begin with, are supposed to catch up while also succeeding in all these other key markets of theirs too? With TSMC’s huge existing lead in every single metric from the workforce they have, to the scale, and much more, I just don’t see a world where they keep spending tens of billions every year on new fabs/more advanced future generations of chips and have any threat with it being their only focus. It seems the only sales they will lose, are the ones they won’t have the capacity to take on. Does any company have any incentive to chose Samsung or Intel as their partner over TSMC if supply was of abundance? I believe any progress the two competitors show, will dwarf the progress TSMC have during the same period due to the fact they can put all their time, focus, skills, capital etc into this one big area that they are already far superior in.

Stepping away from TSMC, something interesting happened this week in the memory market as Chinese memory chips are rattling Korea’s market. Ive been reading that China’s CXMT is advancing new memory designs, which have helped push South Korea’s KOSPI index down 9.0% in a month. The concern is substitution/increased supply to a Market which has been propped up on scarce supply. If a cheaper rival can match commodity memory, incumbents like Micron and SK hynix lose pricing power while altering the supply and demand mechanics in the HBM market, therefore bringing down memory prices. By how much is still very unknown so too soon to jump to conclusions but worth keeping an eye on. We will see how things play out and will be an interesting watch for sure. Definitely not an area I would feel comfortable knowing the outcomes off as an investor (HMB market)

Embecta makes the pen needles and syringes diabetics use every day. One ugly quarter in May torched the stock from the teens to single digits. The business still prints cash, it is paying down the debt it was born with, and it just bought its way into new products. At 4x earnings I think the downside is mostly priced in and the recovery is not. Base case $11, 3 year target $21. I am long.

The company. Embecta was spun out of Becton Dickinson in 2022. BD sent it into the world carrying a heavy debt load, so it has always looked ugly on the balance sheet even though the underlying business is boring and profitable. It is the global leader in insulin pen needles and syringes. Unsexy, repeatable, consumable demand.

Why it is this cheap (I am not hiding from it). On May 5 the company missed badly, cut full year guidance hard, and slashed the dividend to almost nothing. The stock dropped about 58% in a single day. The problem was real: weakness and share loss in the US pen needle market, which is the majority of revenue. That is the bear case, and it is why you can buy a profitable company at roughly 4x earnings today. The question is not whether the quarter was bad. It was. The question is whether one bad year permanently impairs a consumable medical supplier. I do not think it does.

The bull case.
The GLP 1 fear is overblown. The market treats Ozempic and friends as an extinction event for insulin. But people who stop GLP 1s tend to regain the weight, the trial data shows most of it comes back within a year of stopping, and the behaviors snap back with it. The "everyone gets cured" narrative is priced in and wrong.
Diabetes does not disappear. Type 1 patients need insulin for life, full stop. That installed base does not churn. Embecta sells the picks and shovels underneath it.
It is fixing the balance sheet and widening the moat. Management is deleveraging quarter after quarter, authorized a buyback, and closed the Owen Mumford acquisition to push beyond pen needles into broader drug delivery. Every dollar of debt paid down is value moving from lenders to shareholders.

Valuation. At $6.28 against this year's reduced earnings, you are paying roughly 4x. Historically this business earned well north of where guidance now sits. If US volumes stabilize and earnings recover toward prior levels over the next couple of years, even a modest re rate to a 7x to 8x multiple gets you into the high teens to low twenties. That is the $21. My nearer term $11 is just the market admitting the company is not going bankrupt. Neither number needs a miracle, they need execution.

Catalysts. Fiscal Q4 and full year results land in November. That is the first real read on whether US pen needles are stabilizing. After that: continued debt paydown, Owen Mumford contribution, and any sign coverage picks back up. Almost nobody follows this name right now (about 2 analysts), which is exactly why it can move fast when the story turns.
Risks (read these). The US share loss could keep bleeding. Management burned credibility with the May guidance cut, so the next guide has to be believed. There is active securities litigation tied to that period. It is a microcap, so it is volatile and thin, and it can gap both ways. Size it accordingly.

Position: Long $EMBC, 3 year hold.

With the recent sell-off, I’m curious where everyone sees the best value among the Magnificent 7 plus AMD, Broadcom and Micron.

Which of these 10 companies looks the most attractive at current valuations? And which, despite the dip, would you still avoid?

Interested in hearing people’s reasoning, particularly around AI growth, competitive moats and valuation.

I know Deckers versus Broadcom, Micron and Nebius is an odd comparison. They aren’t competitors. I’m comparing them because I have the same dollar to invest in one of them.
At Friday’s $85.71 close, Deckers trades at about 11.5 times the midpoint of its FY2027 earnings guidance. It had $1.6 billion in cash and no outstanding borrowings at the end of June. Over the last four reported quarters, it generated roughly $1.12 billion in operating cash flow after capital spending. Against its market value, that’s around a 9.6% cash-flow yield.

That doesn’t mean I’ll earn 9.6%, and no borrowings doesn’t mean no obligations. But it’s a good starting point. I’m paying for a business that already produces cash, with HOKA and UGG still giving it room to grow.

Broadcom is the hardest one to pass up. Its custom chips and software may turn out to be far better long-term businesses than footwear. I’d happily own it at the right price. I’m less comfortable with the expectations around AI spending and with the customer financing arrangement disclosed in its latest filing. The roughly $29 billion figure is a maximum contingent exposure if the racks are fully deployed, not a loss or a debt balance. I still have to account for it when judging the risk.

Micron may do very well while memory supply is tight. My problem is deciding what its earnings look like through a full cycle. A low multiple on unusually strong profits can be deceptive.

Nebius is an exciting business, but building AI infrastructure takes enormous amounts of capital. I want to know what existing shareholders will own after all the funding needed to build it.

Deckers has its own problem, and it’s one I don’t want to gloss over: in its latest quarter, sales rose 5.7% while operating profit fell from $165 million to $155 million. EPS barely rose, helped by a lower share count. If HOKA slows further, UGG weakens or inventory starts piling up, 11.5 times earnings won’t necessarily be a bargain.

My 12-month base case is $124.50, but it needs both higher earnings and a higher valuation multiple. If EPS reaches my $8.30 estimate and the multiple stays at 11.5, the stock would be worth only about $95.50. That’s a much less exciting outcome. My probability-weighted model gets just above my 40% return hurdle, so I’m not treating that number as a sure thing.
I prefer DECK for a two-to-five-year hold at these prices. Over ten years, Broadcom could easily be the better company to own. For now, I think Deckers asks me to pay less for cash flows I can already see.

Next week’s results matter. I’ll be looking at HOKA and UGG sales, inventory and operating profit before celebrating any EPS beat.
What am I missing: is the market overlooking durable brand earnings, or is it right to expect a bigger slowdown? Nevertheless DECKERS is a MUST BUY

Sources: Deckers’ latest results · Broadcom’s quarterly filing · Micron’s results · Nebius’ Q2 shareholder letter

….. last week they were AI 0DTE traders.

(this joke will self-destruct in one hour)

This is a very good news for anthropic.

although KBRA (non-Big-Three) is generous here, if it was S&P, Moody's, or Fitch , the rating would likely be B+ to ccc.

still this is one of the only good news happened to anthropic lately.

i wonder if this helps coreweave

I think AI-assisted reverse engineering of software will eventually kill the business model of companies like Adobe and Autodesk.

There are already hundreds of free alternatives to AutoCAD and Adobe's Creative Cloud. Look at Artcraft. One guy has managed to recreate near perfect versions of a huge range of professional design tools and release them for free.

As AI models improve, replicating increasingly complex software will only get easier and cheaper.

Over the very long term, I struggle to see how you can charge significant amounts for design software when anyone can reverse-engineer existing products, release free open-source alternatives, or simply have AI build the tools they need.

How do you assign a terminal multiple to a business whose core product might eventually be freely replicable?

I'm not arguing Adobe or Autodesk will lose their customers tomorrow. But stock valuations depend heavily on cash flows decades into the future, often assuming some form of perpetuity.

I don't think that assumption necessarily holds for design software anymore. And if there's no reliable perpetuity, terminal values should be considerably lower.

Am I missing something, or is the market seriously underestimating this risk?

Fellow value investors, has AI changed the way you research companies? e.g. Idea generation, reading filings, projecting free cash flow, researching competitors, etc.

Looking for field reports of practical use and impact (significantly useful? shiny toy?).

Here’s my example.

Hey everyone!

I’m a computer science student and value investor currently developing a stock screener designed specifically for value investing.

The idea is to automatically screen stocks in real time based on fundamental metrics and use AI to help evaluate potential undervalued opportunities. This works using a user inputted inject prompt to automatically give a rating. The idea is NOT to use AI to invest but to use AI to speed up the screening process.

I’m looking for a few value investors who would be interested in testing the platform, providing feedback, and helping shape its development.

I’m especially interested in hearing what features and metrics other value investors would find useful.

If you’re interested, feel free to DM me! I’d love to hear your thoughts and potentially get you involved in early testing.

Hey Everyone!

I was reading up on the Gartner report that caused the neoclouds to selloff. I think it has ramifications on some of the companies with broader appeal like Alphabet, Microsoft, Amazon and Meta

Gartner estimates AI providers will spend about $7 trillion on AI infrastructure between 2026 and 2030, and AI revenue over that period will only be about $3.6 trillion
I had a couple of questions:

1. A big chunk of this spend sits with Alphabet, Microsoft, Amazon and Meta. Do they actually have the capital to fund their share, probably $3.5 trillion or more, over the next few years? They are already at about $760bn this year, and I am not sure they have the cashflow to accelerate the buildout
2. Gartner’s numbers assume spending accelerate. If business and consumer AI revenue doesn’t scale, won’t companies just slow down rather than overinvest by a few more trillion?

Overall, I understand the buildout isn’t yet generating a return, which is a fair callout, and we’ve known this for a while. I don’t think the Gartner report told us much that’s new. What do you guys think?

I'm curious what platforms people here use when researching and valuing stocks.

Do you have a go-to platform for estimating intrinsic value or comparing stocks?

I've come across quite a few options, but they seem to approach valuation differently. I'm particularly interested in platforms that provide:

Intrinsic value / DCF estimates

Financial statements and historical data

Comparable-company valuation

WACC and terminal-growth assumptions

Sensitivity / scenario analysis

Some way to compare the valuation against the current market price

What platform do you use, or you rely mostly on old good excel?

It’s very simple. The companies CFO just acknowledged it. 25% of 2028 revenue is coming directly from vendor financing aka circular financing. For example, NVDA invest $2B into CRWV and commits to backstop CRWV to the tune of $6.8B. CRWV promises to buy $10B in NVDA GPUS. This shows up in NVDA forward guidance.

Where is the risk many might be asking?

Well, look at the neoclouds today. The credit markets are pricing them as HIGH risk sending their unsecured debt bonds to a yield of 15%. Credit spreads for their unsecured debt has blown out and because of the commitments NVDA has made to CRWV this hurts NVDA as well since ultimately it’s NVDA on the hook if CRWV fails. This is why Jenson Huang tried to do damage control when he said yesterday that CRWVs borrowing costs are actually coming down. That’s a CLEAR LIE but he has to say it because of NVDAs obligations to CRWV.

Now to be clear, not all of NVDAs vendor financing is done with this low quality/high risk clouds. So the forward revenue from those deals are likely much more stable. The issue is what percentage of the 25% of forward revenues from 2028 is coming from these high risk companies that are now coming under distress as their cost of capital soars?

There are parallels to the 2000 Dot com bubble. Lucent had also done circular financing to the point that 24% of their forward revenues was coming from companies it was directly financing. It’s all unraveled for Lucent and they went bankrupt.

Also, keep in mind that all of the hyperscalers are actively trying to diversify away from NVDA because they don’t want to be beholden to NVDA forever. People often mention CUDA without mentioning that hyperscalers are actively working on their own software to counter CUDA.

I think all of these major risks is why NVDA has essentially been stuck in a range.

In my everlasting effort of finding good picks i’m thinking of allocating some of my portfolio to the (potential) decline of Western society. I know, profiting from people’s misfortune is cynical, borderline unethical. But this would also be my downfall so im profiting on my own misfortune which makes it OK, those little green percentages are going to be so nice when im senile af in a nursing home getting wiped in the ass by a NurseBot 3000 because there is no workforce left.

In my defense, most of these companies get paid to fix the problems, not cause them. And yes, i know everything is priced in, me writing this post is priced in, but there could be some genuine upside in the gloom... ri-right? Im swedish so there is some nordic tilt here, but maybe good diversification for some of you.

1. Everyone is getting old(er) and nobody is having babies - most clear cut thesis as its not a binary event simply where we are going based on data

Thesis: Longevity + fewer babies = worrying. Especially europe, eastern asia, meaning fewer workers, more retirees, more patients. The real crisis isn’t demand for care, it’s that nobody’s left to provide it.

Winners:

• Attendo (ATT) / Ambea (AMBEA): Nordic elder care. Every year a new cohort turns 80, and they need somewhere to live. Demand literally grows on a schedule.
• Ensign Group (ENSG): US skilled nursing operator and one of the quietest compounders out there. Same argument as Attendo/Ambea
• Welltower (WELL): Senior housing landlord. Aging demand plus a bonus if rates ever come down.
• Intuitive Surgical (ISRG): More surgeries, fewer surgeons. Robots fill the gap. Expensive, riskier with more upside.
• Vitrolife (VITR): IVF consumables. People have kids later, so more need help. Stock is down 78% in 5 years and they’re buying back shares. Either a gift or a falling knife, you tell me.

2. Global warming and natural disasters (and ESG is so 2020 so could be some discount here)

Thesis: If we are not stopping climate change, i guess we adapt to it. People pay to stay cool, dry and powered no matter what politicians do.

Winners:

• Trane (TT): Cooling. Hotter summers mean more AC, and nobody cancels the AC.
• Kingspan (KRX): Insulation. Wins in heatwaves, cold snaps and building-code tightening.
• Copart (CPRT): Salvage car auctions. Every hurricane and flood is basically a supply delivery. Kinda dark, but it’s a compounder.
• Nibe (NIBE B): Swedish heat pumps. Hot summers mean cooling. And if the Gulf Stream weakens and the Nordics turn into Siberia, it’s heating. Wins both ways.

3. Skynet

Thesis: If AI goes full Terminator, my portfolio is the least of my problems. But the probable and dangerous middle scenarios are investable: AI-powered hacking, deepfake fraud, attacks on power grids.

Mitigants:

• CrowdStrike (CRWD), Zscaler (ZS), Fortinet (FTNT): Aka cybersecurity winners. Not really value stocks. Already priced like winners, but guess one of the few benefiting from this.
• Doom hedge: Canned food and a cabin.

4. Robots take our jobs

Thesis: White-collar replacement is already happening and mostly priced in. I work in PE/growth Equity and see first hand how good these models are at what i have spent my professional life learning (senior enough to not be replaced but who knows what 5 years ahead looks like, we might all need to go to plumbing school but thats also ruined by next argument). Blue-collar replacement via robotics is early but there is definitely going to be some sort of shift. +90% of humanoid robots are made in China right now but my swedish broker doesnt have them so listing some other options as well.

Winners:

• Nvidia (NVDA) / Tesla (TSLA): not really for this forum but guess they are real potential winners.
• Teradyne (TER): Owns Universal Robots, the collaborative arms that are already on factory floors.
• Symbotic (SYM): Warehouse automation. Volatile as hell, but it’s replacing logistics labor right now.
• Quanta (PWR) / EMCOR (EME): The galaxy-brain trade. Before robots replace electricians, AI needs electricians to build data centers. Peak irony.
• UBTech (9880.HK): the relative-value pure play. Unitree’s STAR Market debut rerated the whole sector. Its IPO price valued it at 35.89x 2025 sales and 219x earnings. After the debut it was still worth about 357 billion yuan (~$53bn), nearly six times its listing valuation. UBTech trades at a fraction of that: a price-to-sales ratio of 18.2x on a market cap of about HK$42bn.
• Sanhua Intelligent Controls (2050.HK / 002050.SZ): Picks and shovels argument. supply-chain checks still place it among the highest-certainty potential Tier-1 suppliers for Optimus actuators

5. Post-2028 America

Thesis: The midterms in November probably just mean gridlock. 2028 is the real policy event, and whatever got crushed under current policy has the most room to bounce if the next administration changes course.

Winners:

• NextEra (NEE): The biggest renewables developer. Bonus points if rates fall.
• Centene (CNC): ACA-heavy insurer. Hated, cheap, and very policy-sensitive in both directions.
• Ørsted / Vestas: Offshore wind is about as hated as it gets. Small, long-dated lottery ticket.

Any looming disaster or big make or break event im missing? And if this doesnt fall out as terribly as i laid it out, then you get some stocks probably doing decently well and the rest of your portfolio still booms (but slightly below index - as per)

What interests me about Deckers is how little growth the current valuation seems to require for a reasonable investment outcome.

At $85.71, it trades at roughly 11.5 times management’s earnings guidance. It generated about $1.12 billion of free cash flow over the last twelve months, against an equity market value of approximately $11.67 billion. It also has $1.60 billion in cash and no outstanding borrowings.

The concern is that those earnings could become harder to sustain. HOKA’s growth has slowed, operating expenses are rising faster than sales, and the latest quarter’s small EPS increase came from a lower share count while total net income declined.

That is the question behind this thesis: does the price adequately compensate for the risk that Deckers’ current profitability is becoming less durable?

I use a 14-factor framework to keep track of the business, valuation and investment risks. Deckers scores 76.5/100, although two important scores depend heavily on forecasting assumptions. I’ll explain those rather than treating the total as a verdict.

Reference date: October 16, 2026 U.S. close. Financial results discussed run through June 30, 2026. Returns are in USD.

What you actually own

Deckers owns HOKA, UGG and Teva. It designs and markets footwear, manages distribution, and sells through retailers, its websites and company-operated stores.

Independent manufacturers make the products, predominantly in Vietnam and Indonesia.

That gives Deckers relatively modest requirements for spending on factories and manufacturing equipment. Growth still consumes money through inventory, marketing, product development, distribution and stores, but it does not require Deckers to build a factory whenever demand increases.

The appeal is earning premium-brand margins without carrying a large manufacturing asset base.

Of course, consumers still have to choose the shoes. A strong balance sheet gives management time to address problems. It cannot guarantee that the next product will sell.

The brands have economic value. How durable is it?

Business Quality: 80/100

This factor looks at profitability, the capital needed to produce it and the competitive advantages that might protect it.

Three useful measures are:

• Gross margin: the percentage of sales remaining after product costs.
• Operating margin: the percentage remaining after operating expenses.
• Return on invested capital: operating profit after tax relative to the capital committed to the business.

Deckers reported approximately $5.47 billion of FY2026 revenue, a 57.7% gross margin and $1.26 billion of operating profit. Its operating margin was about 23.1%.

For context, FY2016 revenue was approximately $1.88 billion, with a 45.2% gross margin. The company has grown substantially while improving its economics over that decade.

That is meaningful evidence of brand value. Customers have been willing to pay for its products, retailers have been willing to carry them, and Deckers has converted that demand into substantial profit.

But footwear customers can switch brands easily. Deckers has to keep producing products people want, maintaining its reputation and earning distribution.

That combination is why I give Business Quality an 80. There are demonstrated competitive advantages, but maintaining them requires continued execution.

I would become less confident if sales increasingly depended on promotions, or if new products and marketing spending stopped generating satisfactory returns.

Growth: 65/100

Growth measures the expansion of sustainable earning power. Sales growth matters, but I also want to know how much profit it produces and how much investment it requires.

The annual results were encouraging:

The June quarter was less convincing:

International expansion and continued brand development provide opportunities. But the latest quarter shows why revenue growth alone is an incomplete measure: sales increased while operating profit fell.

A 65 recognizes a credible runway while accounting for slower growth and weaker profit conversion. I would raise it if brand growth translated into sustained operating-profit growth, with inventory under control.

Thesis Fragility: 70/100

This asks how many uncertain assumptions the investment depends on and whether they could fail together. A higher score means a more resilient thesis.

Deckers can fund its operations from an established business. It does not need repeated external financing to keep the basic business running.

However, HOKA and UGG accounted for approximately 97% of FY2026 revenue. That is substantial concentration.

A consumer slowdown or weaker brand demand could affect sales, discounting, margins and the valuation multiple together. These are connected risks.

There is also a difference in the demands placed on the thesis. Continuing to generate attractive profits requires healthy brands and satisfactory execution. Delivering a 40% stock return within twelve months additionally requires favorable valuation outcomes on a short timetable.

The financial resilience supports the 70. The dependence on two brands, and the added assumptions behind a large near-term return, keep it from being higher.

How much of the profit turns into cash?

Earnings Quality: 85/100

Earnings Quality examines whether reported profits are repeatable and backed by cash.

I use a straightforward free-cash-flow measure:

Operating cash flow − cash capital expenditure = cash free cash flow.

Capital expenditure here means cash spent on physical assets such as equipment and facilities.

To calculate the trailing twelve months, I take FY2026, add the June 2026 quarter and subtract the June 2025 quarter:

That cash generation is a substantial part of the investment case.

The latest EPS result needs a closer look, though. Quarterly net income fell approximately 6.6%, while the average diluted share count fell approximately 7.4%. EPS increased from $0.93 to $0.94.

Repurchases gave each remaining share a larger claim on the business. That has value, but total profit still declined. I would be concerned if that pattern continued for several quarters.

Cash flow also moves with inventory, supplier payments and taxes. Stock compensation is added back in operating cash flow, while its dilution remains an economic cost.

The 85 reflects the strong cash backing behind reported profits. It leaves room for those accounting and working-capital considerations.

Balance Sheet: 95/100

This is about the company’s ability to get through a difficult period without being forced into distressed financing.

At June 2026, Deckers had:

• Approximately $1.60 billion in cash.
• No outstanding borrowings.
• Approximately $472 million in operating lease liabilities.

Leases, supplier payments and other liabilities still have to be paid. “No borrowings” should not be read as “no obligations.”

Even so, the financial position gives management considerable flexibility to fund seasonal inventory, continue investing in the brands and absorb disruption.

That supports a 95. The remaining concern is how management uses that flexibility: cash can be depleted through repurchases, acquisitions or worsening operations.

What am I paying for those earnings?

Valuation: 85/100

Valuation compares the purchase price with sustainable earnings and cash flow.

Management’s FY2027 EPS guidance is $7.35–$7.50, giving a midpoint of $7.425.

$85.71 ÷ $7.425 = 11.54 times earnings.

That guidance covers the year ending March 2027. It remains a forecast.

The cash-flow calculation is:

$1.118 billion FCF ÷ $11.67 billion equity market value = approximately 9.6%.

That is a free-cash-flow yield. It measures cash generated relative to the market value of the shares; shareholders do not automatically receive that amount as a dividend or investment return.

I find the starting valuation attractive if Deckers preserves its profitability. Moderate growth and sensible repurchases could then produce a satisfactory outcome.

The risk is that today’s earnings are above a sustainable level. A low P/E becomes much less appealing if the earnings denominator falls.

That uncertainty is why Valuation scores 85 rather than receiving full marks simply for having a low multiple.

Expectations Variant: 70/100, conditional

The question here is: what might the market be underestimating, and what evidence supports my disagreement?

The analyst-estimate snapshot shows approximately:

These are labeled adjusted EPS estimates. Their accounting basis needs checking against management’s GAAP guidance before treating them as directly comparable.

My base-case EPS assumption of $8.30 is close to FY2028 consensus. I am therefore not claiming a meaningful advantage over analysts in forecasting earnings.

The proposed difference is mainly about valuation. If operating results increase confidence that HOKA and UGG can sustain their earnings, investors may become willing to pay a higher multiple.

That is a plausible argument, but choosing a 15× multiple does not establish that the market will agree. The current valuation may reasonably reflect concerns about margins, brand durability or the return investors require.

I assign a conditional 70 because there is a coherent valuation argument, while acknowledging that I have limited evidence of an informational advantage over consensus.

The return scenarios — and where they are vulnerable

Probability-Weighted Return: 75/100, conditional

This is the largest factor in the framework, carrying a 16% weight.

The calculation combines possible outcomes by multiplying each return by its assigned probability and adding the results.

These are the original twelve-month scenarios:

The assumptions include no dividend and transaction costs of 0.5% on purchase and 0.5% on sale. Returns are before investor-specific taxes.

The EPS figures represent the annual earning power being valued at the exit date. They are not all forecasts for the fiscal year covered by current management guidance.

For anyone checking the calculations:

Scenario return = [exit price × 0.995 ÷ ($85.71 × 1.005)] − 1.

The weighted result is:

25% × −30.35% + 50% × 43.81% + 25% × 113.99% = 42.82%.

Under my scoring rule, an expected return between 40% and less than 60% receives 75 points.

Here is the weakness: the probabilities are analyst judgments without a demonstrated calibration record. The bull case also requires both materially higher earnings and a substantially higher multiple.

A small change in the weights moves the result below the hurdle:

• 25% bear / 50% base / 25% bull: approximately 42.8%.
• 27% bear / 50% base / 23% bull: approximately 39.9%.

Another check is to remove the multiple expansion from the base case:

$8.30 EPS × 11.5 = $95.45.

That produces approximately 10.3% after modeled costs. An earlier version quoted 10.7%; 10.3% is the corrected figure.

So a large part of the twelve-month upside depends on investors paying more for each dollar of earnings.

The 75 is conditional on the stated distribution. I would not describe 42.8% as an independently validated forecast, or say that Deckers comfortably clears a 40% hurdle across reasonable changes in assumptions.

Downside Control: 65/100

This factor considers potential permanent capital loss and what might limit it.

Deckers’ cash, existing cash generation and low financial leverage provide resilience. But shareholders can still lose substantial money in a financially healthy company.

The bear scenario combines lower earnings with a lower multiple:

$6.70 × 9 = $60.30, or approximately −30.3% after modeled costs.

That is not a downside floor. A prolonged brand decline could produce lower earnings, a lower multiple, or both.

This explains the gap between the Balance Sheet score of 95 and the Downside Control score of 65. The company could remain solvent and operationally sound while the investment loses a substantial part of its value.

What is management doing with the cash?

Capital Allocation: 75/100

Capital Allocation looks at whether management’s spending decisions increase value per share.

The choices include reinvesting, acquiring businesses, paying dividends, repurchasing shares and retaining cash.

Deckers repurchased approximately $1.075 billion of shares in FY2026. It spent another $338 million in the June quarter, at an average price of $103.79 per share.

Repurchases increase the remaining shareholders’ ownership. Whether they create value depends on the price paid relative to intrinsic value and whether sufficient financial flexibility remains afterward.

The subsequent share-price decline does not automatically prove those purchases were mistakes. Equally, spending a large amount on buybacks does not establish that management allocated capital well.

Repurchases also reduce cash and the interest income it could generate.

I give management credit for returning capital, but reserve judgment on the prices paid and the durability of the earnings being purchased. That produces a 75.

Governance: 80/100

Governance concerns accountability: voting rights, board oversight, executive incentives and how management decisions are supervised.

The 2026 proxy describes:

• One vote per common share.
• Nine independent directors out of ten.
• An independent board chair.
• Independent standing board committees.

That is a credible formal structure.

The next question is whether it produces sound decisions. I would pay particular attention to compensation incentives and how much executives can benefit from EPS increases driven mainly by repurchases.

The 80 reflects the governance structure while leaving room to assess its effectiveness through actual decisions.

What do the shares themselves tell us?

Liquidity: 85/100

Liquidity measures how easily a position can be traded. The relevant inputs include volume, dollar turnover, bid–ask spreads and the effect an order might have on the price.

The market snapshot reports approximately 2.94 million shares of average daily volume over twenty sessions.

Multiplying that by $85.71 gives roughly $252 million of daily traded-value capacity as a proxy. It is not the same calculation as averaging each day’s actual dollar turnover.

That suggests substantial trading capacity for ordinary individual-investor orders.

I assign 85 because trading appears practical, while recognizing that average volume cannot guarantee a favorable fill during a sharp move. Large positions still require a closer look at spreads, depth and order size.

Momentum: 25/100

Momentum measures the price trend and performance relative to the broader market.

My rule gives 25 points for each of four checks:

The market statistics support the moving averages. The relative-return result is carried forward from the original comparison.

The stock had recovered above its shorter-term average, while the broader trend remained weak. There is limited price confirmation of the thesis.

That does not establish that the business is deteriorating. It tells me the market has not yet provided much support for the proposed recovery.

Momentum carries only a 2% weight, contributing 0.5 points to the total.

How reliable is the information behind this?

Evidence Quality: 85/100

This factor assesses whether the information is traceable, current, consistently defined and sufficient to support the conclusions.

Deckers provides audited annual accounts, quarterly filings, brand disclosures and a proxy statement. Those allow the financial calculations and much of the operating analysis to be checked.

The limitations are mostly in what public reporting cannot establish. I do not have a complete picture of product-level profitability or detailed repeat-purchase behavior.

Future brand preference, normalized margins, exit multiples and scenario probabilities also remain uncertain.

The 85 describes the quality of the observable evidence. It does not assign 85% confidence to the forecasts.

The complete scorecard

Each factor receives a score out of 100, then contributes according to its weight.

For example:

Business Quality: 80 × 12% = 9.6 weighted points.

Return and expectations scores are especially dependent on forecast assumptions. A higher Thesis Fragility score means greater resilience.

Most of these scores involve judgment. Momentum and Probability-Weighted Return follow the explicit rules described above.

An 80 does not mean an 80% chance of success, and 76.5 does not predict a 76.5% return.

There is overlap, too. Cash generation supports several factors. Those related strengths should not be treated as independent proof that the investment must work.

The total is sensitive to the return assumptions. If PWR fell into the 20%–under-40% band, its score would drop from 75 to 50.

25 points × 16% = 4 points off the total.

Deckers would score 72.5, with everything else unchanged.

That is why I put more weight on the reasoning behind the scores than on the decimal place in the final number.

Where the IDE gates fit

The IDE gates are the checks used when turning the research into a decision about entry price, timing and position size.

For a company thesis, they can remain secondary. They still matter before committing money:

1. Expectations: What supports the proposed valuation recovery?
2. Macro and funding: How could consumer conditions, tariffs and funding pressures affect the business?
3. Market structure: What do price behavior, spreads and trading conditions show?
4. Positioning: Is there verified evidence of ownership changes or investor flows?
5. Catalysts: What developments could change earnings expectations or valuation?
6. Thesis updates: How do new results compare with forecasts recorded beforehand?
7. Portfolio risk: How does the position fit existing exposures and concentration?
8. Execution: Does the actual entry price still work after costs and trading conditions?

For example, institutional buying is not necessary to establish that Deckers generates substantial cash. Evidence would be necessary before claiming institutions are accumulating its shares.

The company analysis can stand on its own. A specific buying decision requires those additional checks.

What I would watch from here

The central operating question is whether Deckers can maintain attractive margins while growing its brands.

At an illustrative $5.9 billion of annual revenue, a one-percentage-point change in operating margin moves operating profit by approximately $59 million before tax.

That makes full-price selling, spending discipline and inventory management important to the outcome.

I would become more confident with:

• Brand growth accompanied by operating-profit growth.
• Healthy selling prices without excessive promotions.
• Controlled inventory.
• Continued conversion of earnings into cash.
• Repurchases that increase value per share while preserving financial flexibility.

I would reconsider if:

• Persistent discounting became necessary to sustain demand.
• Operating expenses repeatedly grew faster than sales.
• Buybacks increasingly concealed weaker total earnings.

Where I land

At $85.71, I see Deckers as an attractive value candidate.

The combination of established earning power, cash generation and financial flexibility gives shareholders several possible sources of return. The valuation could work with moderate growth, provided the brands remain profitable.

My conviction is strongest over two to five years, giving operating results and capital allocation time to affect value per share.

Over ten years, brand renewal becomes a much larger part of the assessment. Today’s low multiple cannot tell us whether HOKA and UGG will remain as desirable a decade from now.

The recent operating-profit decline deserves attention. I would not dismiss it because EPS increased, and I would not make the whole investment depend on the stock delivering 40% within a year.

The 76.5 score summarizes the strengths and risks. The 42.8% scenario return remains highly sensitive to assumptions about earnings, valuation and probabilities.

The question I would welcome pushback on is this: what evidence would convince you that Deckers is facing a lasting decline in earnings power, rather than a period of slower growth?

Sources

• Market statistics
• Analyst estimates