For some, the thought of buying plastic shoes from Crocs (CROX) is a bridge too far. Investing in Crocs stock, however, may not be a bad plan.
The company blasted up, following its Q3 earnings report. The phenomenon that is Crocs seems to be holding steady, and that’s enough to make me at least somewhat bullish. (See Insiders’ Hot Stocks on TipRanks)
So far this year, Crocs stock has been on an uptrend. Better yet, one with very little fluctuation; it’s been just steadily moving upward for the most part. The share price has more than doubled in value from early 2021 to late September. It’s slumped a bit since, but we’re still looking at levels that double early 2021’s figures.
Driving that incredible uptrend has been phenomenal sales. The company posted record revenues for the third quarter. Crocs’ earnings report noted that the company brought in $2.47 per share in earnings. This sounds good in isolation, but even better when you realize that the company was only expected to earn $1.88 per share.
Revenue was a smaller beat, but a beat nonetheless. It posted $626 million in revenue for the quarter, against an expected $610 million.
The most noticeable gains came with comparisons to this time last year. The $626 million in revenue compares wonderfully to the $362 million made in the same quarter the previous year. Earnings, meanwhile, were just as good; the company’s $2.47 per share in adjusted earnings dwarfs the $0.91 per share seen the previous year.
Weird Shoes, Great Marketing, Killer Stock
Sure, to the outside viewer, Crocs are weird. Who wants to wear plastic sandals? Moreover, for most people, the idea of even being able to wear such shoes isn’t possible except for a few warm months. All those holes make them a terrible option for, say, a winter north of Kentucky. Or, for any time it’s raining.
When the weather’s right, though, it’s easy to see Crocs proving a lightweight and well-ventilated option. They might even be comfortable during hot, dry weather, and prove a nice connection to the barefoot days of youth.
Regardless of the elements making up the market appeal, it’s impossible to deny that Crocs has serious market appeal. Sales are blasting upward. The company has made full use of online sales options that managed to save many companies back in 2020, and are still useful today.
Crocs has already put investors on notice that direct-to-consumer and digital sales were up 60.4% and 68.9%, respectively, in the most recent quarter alone.
Crocs’ digital sales now make up one in every three dollars the company sells. That’s probably the best it will do on this one. A completely digital clothing operation is unlikely, as having physical locations to try on a product helps prevent a lot of expensive return issues.
Wall Street’s Take
Wall Street’s consensus rating rates Crocs as a Strong Buy. Based on the projections of nine analysts that have 12-month price targets on the company issued in the last three months, seven of them consider it a Buy. As for the remaining two, it’s merely considered a Hold.
Crocs’ Strong Buy rating has held fast for most of this year, as it closed out last year as a Moderate Buy.
The average Crocs price target stands in a comparatively narrow range. The average is $183.89, with a high target of $250, and a low of $151. The average price target represents 23.8% in upside.
Concluding Views
Crocs is in a solid position going forward. Some problems have already emerged though, like closures at its Vietnam factories. While these points may get worse as time goes on, Crocs is working to keep going regardless of the delay.
With ships currently waiting to unload off the Los Angeles and Long Beach ports there’s clearly a problem on that front.
Crocs has responded well to a variety of market changes. It absorbed the online rush that marked 2020 with pandemic-related closures. It’s absorbing the supply chain issues that are marking the mid-to-late 2021 market.
Whatever 2022 decides to throw at us, it looks like Crocs may well handle that too.
Disclosure: At the time of publication, Steve Anderson did not have a position in any of the securities mentioned in this article.
Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of Tipranks or its affiliates, and should be considered for informational purposes only. Tipranks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. Tipranks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by Tipranks or its affiliates. Past performance is not indicative of future results, prices or performance.
