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Stock Analysis & Ideas

Here’s Why Top Insiders Are Buying Crocs Stock

Story Highlights

Crocs stock has lost substantial value due to ongoing macro headwinds and balance sheet leverage. However, the company’s top insiders are buying this dip in its stock price.

Shares of casual footwear maker Crocs (NASDAQ: CROX) have lost substantial value in the recent selling. It’s worth noting that CROX stock has fallen by 72% from its 52-week high. Moreover, it is down about 59% this year alone. 

This sharp pullback in CROX stock comes amid rising concerns over consumer spending. Notably, high inflation and rising interest rates point to a slowdown in the economy and negatively impact consumer spending. Furthermore, the ongoing supply challenges and increase in leverage related to the HEYDUDE acquisition pressured CROX stock. 

Besides investors, hedge funds have also lowered their exposure to CROX stock. Per TipRanks’ Hedge Fund Trading Activity tool, hedge funds have sold 481.2K CROX stock in the last quarter. 

Now What?

As Crocs stock has declined quite a lot, its top insiders have used this opportunity to accumulate it. This signifies their confidence in the future prospects of the company. Per SEC filings and TipRanks’ insider trading tool, CROX’s top insiders, including its CFO Anne Mehlman, EVP Daniel Hart, and several other directors, have bought the company’s stock in the recent past. 

Overall, Crocs’ corporate insiders have bought its shares worth $1.2M in the past three months. 

Notably, the momentum in Crocs’ business continues, with management projecting 52-55% growth in its top line in FY22. Further, its valuation appears attractive.

Commenting on the decline, Jonathan Komp of Robert W. Baird said that CROX stock has fallen significantly from the highs “despite possessing among the best continued fundamentals.” Komp added that the company’s valuation is too low for a solid growth company like CROX.

Bottom Line

The continued demand for comfortable footwear and momentum in the Crocs and HEYDUDE brands bode well for future growth. Further, its low valuation is attractive. However, macro headwinds and supply shortages could play a spoilsport in the short term.

Crocs stock has received four Buy and three Hold recommendations for a Moderate Buy consensus rating. Furthermore, CROX’s average price target of $95 implies 81.7% upside potential.

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