Crocs (CROX) delivered solid Q2 2022 results that improved significantly from the year-ago quarter and also beat Wall Street estimates. The stock fell 10.7% on August 5 as investors reacted to the company reducing its full-year revenue guidance.
Record Crocs Brand Revenue
Consolidated revenues increased 50.5% from the year-ago quarter to $964.6 million, beating consensus estimates of $947.29 million. The increase was driven by Crocs Brand delivering record revenues of $732.2 million, representing a 14.3% increase from the year-ago quarter. Digital sales of the Crocs Brand were also up by 16.8% from the year-ago quarter. HEYDUDE Brand revenue totaled $232.4 million.
Adjusted diluted earnings per share increased 45.3% to $3.24 from the year-ago quarter, easily beating consensus estimates of $2.67.
Crocs’ Solid Cash Balance
Inventories at the end of the quarter stood at $501.5 million, compared to $209.1 million in the year-ago quarter. The increase was driven by the addition of the HEYDUDE brand and an increase in transit inventory for the Crocs Brand.
Following the acquisition of the HEYDUDE brand, borrowings totaled $2.77 billion at the end of the quarter, up from $771.4 million as of December 31, 2021. Crocs exited the quarter with $187.4 million in cash and cash equivalent and $475.8 million in available borrowing capacity.
Full-Year 2022 Guidance Lowered
Crocs expect Q3 revenue to range between $915 million and $955 million, an increase between 46% and 53% from the year-ago quarter. However, Crocs cut its full-year revenue guidance to a range of $3.395 billion – $3.505 billion. Initially it expected revenues of approximately $3.50 billion.
Is Crocs Stock a Buy?
On August 4, Robert W. Baird analyst Jonathan Komp reiterated a Buy rating on the stock and raised the price target to $95 from $90, implying a 10% upside potential from current levels. The analyst believes that Croc’s valuation may increase after the solid Q2 results and sustained revenue growth.
The Street is bullish about the stock, with a Strong Buy consensus rating, based on six Buys and two Holds. The average Crocs price target of $79.86 implies 15.61% upside potential from current levels.
Rising Website Traffic Predicted the Strong Results
Crocs’ strong performance shouldn’t have surprised you if you have been a TipRanks’ user who leverages the website traffic screener. Crocs’ rising website traffic had already indicated Q2 solid results.
According to the tool, the Crocs website recorded a 166.40% quarterly increase in global visits to 47.75 million in Q2 compared to the previous quarter. Furthermore, year-to-date, Crocs website traffic increased by 207.14%, compared to the same period last year.
Key Takeaway for Investors
Crocs’ products elicited strong demand in Q2 going by the record revenue registered by the Crocs Brand. However, the company’s decision to cut its full-year forecast signals a possible slowdown heading into year-end.
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