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🦉 The Night Owl Newsletter for February 1st
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Deckers’ Surprise Blowout Has Wall Street Repricing the Story
Written by Chris Markoch
Investors have been waiting for that blowout earnings report. It just might have come in a place they weren’t expecting. Deckers Outdoor Corp. (NYSE: DECK) stock surged 14.2% in after-hours trading after the company posted record numbers on the top and bottom lines in its third-quarter earnings report for fiscal year 2026 (FY2026).
That gain ate up every bit of the upside that is in the company’s consensus price target. But that target is likely to move higher. That’s because of Deckers’ guidance.
The footwear and apparelconglomerate raised its full-year guidance for both earnings per share (EPS) and net sales. In terms of EPS, the company now expects fiscal year 2026 EPS to be between $6.80 and $6.85 per share. That’s higher than the company’s prior guidance of $6.30 and $6.39 per share. It’s also above analysts’ consensus forecast for $6.41.
The same story held for net sales. Deckers now estimates net sales between $5.40 billion and $5.425 billion, above its prior guidance of $5.35 billion and analysts’ estimates of $5.36 billion.
HOKA and UGG Lead the Way
The company’s impressive results underscore resilient global demand for the company’s HOKA and UGG brands. HOKA posted high‑teens growth in the quarter with approximately $629 million in revenue. Net sales for the UGG brand increased 4.9% to $1.305 billion, above estimates for $1.244 billion.
These results confirm that Deckers is still gaining share in performance footwear and maintaining pricing power in its core lifestyle franchise, even as the broader consumer backdrop, evident in many retail stocks, remains uneven. That combination of top‑line growth plus expanding or at least stable margins is exactly what investors want to see heading into a potentially more volatile macro environment.
Analysts May Be Reluctant Bulls
Despite Deckers’ strong beat‑and‑raise quarter, analysts are likely to remain more cautious than the fundamentals alone would suggest. There are a few reasons for that. The sustainability of growth at HOKA’s current scale, a more normalized UGG trajectory after years of outsized demand, and the fact that the valuation already embeds significant past execution.
Plus, while the company’s forward guidance is higher, it’s not explosive. EPS growth in the high single digits off a record base is solid, but not the kind of acceleration that forces a rerating on its own. At the same time, management is clear that it will continue to invest in marketing, distribution, and product innovation, which means that some operating leverage is deliberately being reinvested rather than maximized in the near term.
In short, analysts don’t dislike Deckers; they simply see a high‑quality compounder facing law‑of‑large‑numbers realities and macro uncertainty, limiting multiple expansion absent a clear, new upside narrative. That’s the context in which tariff policy, and specifically developments tied to the International Emergency Economic Powers Act (IEEPA), have become such a focal talking point.
Tariffs: A Real Headwind, But Also a Noisy Catalyst
On the conference call, Deckers management quantified the tariff impact at roughly $110 million for FY2026. The company also said that Q3 represented the largest quarterly tariff hit on a rate basis, with the full 20% burden expected in Q4.
Despite this, gross margin was 59.8%, just below the forecast of 60.3%. That was driven by strong pricing power and a favorable mix, suggesting that the brands have been able to pass on a meaningful portion of higher costs without materially denting demand.
So what happens if the U.S. Supreme Court strikes down or rolls back the IEEPA-related tariffs? The most direct impact would be margin relief and potentially faster EPS growth than the current 7–8% guidance implies. That could support estimate revisions and might give the Street more confidence that mid‑teens EPS growth is achievable again without relying solely on volume gains.
However, this cuts both ways. Management’s comments also imply that Deckers is already absorbing and managing a substantial tariff burden while still beating expectations and raising guidance. That means the bull case doesn’t require a favorable tariff outcome to work. Instead, any IEEPA relief would be incremental upside rather than the core reason to own DECK stock. READ THIS STORY ONLINE
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Chevron Earnings Hint at New Highs—Is CVX Ready to Run?
Written by Chris Markoch
Chevron Corporation (NYSE: CVX)delivered mixed results in its fourth-quarter earnings report. The integrated oil giant had a slight miss on revenue, but earnings came in above expectations. Several metrics were also lower year-over-year, which coincided with lower oil prices in 2025.
However, the company is looking forward to a strong year in 2026. Two reasons for the company’s optimism include a full year of production with the assets it acquired in its merger with Hess. It’s also primed to take a lead role in Venezuela. Chevron announced plans to ramp up production in the country by 50% in the next 18 to 24 months.
Investors may not have gotten everything they wanted from Chevron’s earnings report, but the results show why Chevron continues to be a solid buy in the energy sector. In addition to a solid dividend, Chevron’s results are likely to keep CVX stock rallying to a new all-time high, a target that is likely to be in place by the end of the year.
Record Production Drives Growth
Chevron achieved record production in 2025, posting a 12% increase that placed the company at the top end of its guidance range. This performance was driven by major execution milestones across several key projects, including:
- Tengizchevroil (TCO)
- Permian Basin
- Gulf of America (GOA)
- Geismar chemical facility
Net oil and gas production benefited significantly from the 261 thousand barrels of oil equivalent per day (MBOED) contributed by newly acquired Hess assets, primarily from operations in Guyana and the Bakken formation.
The company’s operational momentum extends beyond traditional upstream activities. In the Eastern Mediterranean, Chevron completed its Tamar optimization project with first gas and reached a final investment decision on the Leviathan expansion, with additional capacity expected online in the first quarter of 2026. The Aphrodite gas development has also entered the front-end engineering design phase, positioning the company for sustained growth in this strategic region.
Looking ahead to 2026, Chevron projects production growth of 7% to 10% at $60 per barrel Brent pricing. As noted above, this outlook incorporates a full year of contributions from Hess assets in Guyana and the Bakken, offshore growth from GOA and the Eastern Mediterranean, and recognizes that the company’s U.S. shale and tight portfolio has reached a production plateau. Management expects TCO to contribute an additional 30 MBOED while cautioning that base production and other factors could reduce output by approximately 50 MBOED.
39 Years and Counting
Chevron announced an increase to its dividend to $1.78 from $1.71, a 4% increase from the prior year. It’s also below the annualized five-year dividend growth of 6.49%. However, it makes it 39 consecutive years of dividend increases for this Dividend Aristocrat.
The dividend is well supported by the company’s adjusted free cash flow(FCF), which was up 35% in 2025 despite the price of oil being down by 15%.
Strong Financial Position and Capital Discipline
Chevron’s financial performance in 2025 underscores its resilience in a challenging price environment. The company generated $33.9 billion in cash flow from operations, with $34.9 billion excluding working capital changes.
Full-year earnings reached $12.3 billion, or $6.63 per diluted share, while adjusted earnings came in at $13.5 billion, or $7.29 per share. These results demonstrate the company’s ability to maintain profitability even as Brent crude averaged $69 per barrel, down from $81 per barrel in 2024.
The company returned a record $27 billion to shareholders in 2025, including $2.2 billion in Hess common stock purchased in the first quarter. This comprised $12.8 billion in dividends and $12.1 billion in share repurchases, reflecting management’s commitment to its through-the-cycle shareholder return strategy.
Capital discipline remains a cornerstone of Chevron’s strategy. The company achieved $1.5 billion in structural cost savings during 2025, with efficiency gains accounting for more than 60% of the total reduction. Management remains on track to deliver $3 to $4 billion in run-rate cost reductions by the end of 2026, positioning the company to maintain its dividend breakeven price below $50 per barrel for Brent crude through 2030.
Higher All-Time Highs Are in Sight
CVX stock is up more than 12% in 2026, heading into earnings. That’s pushed the stock past its rising 50-day simple moving average (SMA) and close to a new 52-week high. This breakout confirms a bullish change from last year’s choppy consolidation pattern and makes the prior ceiling around $155 as a level of fresh support.
More encouraging is that the move higher is being supported by expanding volume, as seen in the MACD line, which is now firmly in positive territory. This signals that momentum is strengthening to the upside and not just a temporary spike.
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Is Altria Becoming More Than an Income Stock?
Written by Chris Markoch
Altria Group, Inc. (NYSE: MO) stock is off to a strong start in 2026, up more than 7.3%. However, MO stock was down nearly 3% in midday trading on Jan. 29, as the company’s earningswere flat year-over-year (YOY).
The setup heading into earnings was whether the company could shift investor sentiment about MO stock from a defensive income play to a revival story that could entice growth investors.
At roughly 11x forward earnings and backed by one of the most dependable dividends in the market, Altria looks undervalued relative to its stability and cash generation. If EPS growth trends hold above 3% annually, investors could see a total return exceeding 10–12% through a combination of price recovery and the company’s robust dividend.
With yields on bonds and money markets expected to taper alongside easing inflation, equity income names like Altria should see renewed inflows. The stock’s technical reversal, improving growth narrative, and disciplined capital policy suggest investors might finally get what they’ve been waiting for: capital appreciation alongside a market-crushing yield.
For long-term investors, that means Altria’s story is evolving. Once prized only for its dividend, the stock is regaining foundational strength backed by steady innovation and fresh bullish momentum. For patient shareholders, this Dividend King may once again prove that income and growth don’t have to be mutually exclusive.
Strong Fundamentals Support a Valuation Reset
In Altria’s Q4 2025 earnings report, management successfully navigated a challenging year marked by persistent inflation and evolving tobacco regulations. The company reaffirmed its full-year adjusted EPS growth guidance in the 2–4% range. That would be steady progress for a mature consumer staples name. That consistency cements Altria’s reputation for reliability in volatile markets, particularly as investors refocus on income-generating equities in a lower-rate environment.
Revenue stability was once again anchored by smokeable products, which continue to be the profit engine as cigarette volumes decline. Price increases, disciplined cost control, and share buybacks compensate for volume pressures.
Altria’s pricing power remains unmatched. Net revenue in the quarter of roughly $5 billion demonstrated resilience and supported gross margins near 70%. Meanwhile, operating income growth and a capital-efficient structure allowed the company to generate strong cash flows to fund dividends and debt reduction.
Dividend Power and Capital Discipline Continue to Attract Income Investors
Altria’s dividend growth and capital return policies headline the investment story.
Management raised the annual dividend for the 59th consecutive year in 2025, marking nearly six decades of uninterrupted growth.
The current yield, which is at 6.98% as of this writing, remains among the most generous of any Dividend King and among consumer staples stocks.
The dividend is well supported by cash flow. Altria generated over $8 billion in operating cash flow during 2025 and maintained a payout ratio around 75% of adjusted EPS, keeping ample room for reinvestment and share repurchases.
The company bought back approximately $1 billion in stock in 2025 and increased its repurchase authorization for 2026.
Strategic Moves Fuel the Next Phase of Growth
Beyond the attractive dividend yield, Altria’s growth strategy is turning investor heads. Its smokeless and next-generation product portfolio, led by on! nicotine pouches continues capturing market share, supported by double-digit volume growth. Management expects on! to become a material earnings contributor within a few years, offsetting cigarette declines.
Altria’s U.S.-focused approach, coupled with regulatory engagement and partnerships in alternative nicotine delivery, is setting up for sustainable innovation-led growth. In its presentation, the company noted progress in integrating its NJOY acquisition and advancing product submissions to the FDA, reinforcing long-term market positioning in reduced-risk nicotine alternatives.
Technical Picture: Bulls Taking the Lead
As mentioned in the introduction, MO stock shows growing bullish momentum. After a steep correction through late 2025 that bottomed near $56 (confirming a deep support level hit in April and May 2025), shares have rebounded sharply higher.
The 50-day simple moving average (SMA), now at $58.97, has turned upward, signaling a short-term trend reversal. The stock’s recent breakout above that line suggests improving sentiment and a potential continuation toward the $64–66 resistance zone seen last fall. That range is slightly above the consensus price target of $63.
Momentum indicators reinforce the uptrend. The MACD has crossed firmly above its signal line, with positive histogram bars increasing. Volume has also picked up during recent upswings, hinting that institutional accumulationmay be underway.
Short-term traders might eye pullbacks toward $59 as buy-the-dip opportunities, while long-term investors could view the current level as an attractive entry point before dividend reinvestment season in February.
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The Night Owl is a financial newsletter that provides in-depth market analysis on stocks of interest to individual investors. Published by MarketBeat and Early Bird Publishing, The Night Owl is delivered around 9:00 PM Eastern Sunday through Thursday. If you give a hoot about the market, The Night Owl is the newsletter for you.
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