“The 'it' shoe of the pandemic”; that's what some are calling Crocs (NASDAQ:CROX), the strange plastic-ish—actually made of a material called “Croslite”, which is not itself plastic or rubber but rather made from crude oil directly—shoes that are a current cause celebre among the young. With celebrity endorsements like Justin Bieber involved—the new line of Justin Bieber Crocs are now available under the name “Classic Clog 2”, intended for wear with a Drew House sock—it's easy to see why they're drawing attention. For investors, though, CROX stock is a much bigger draw, especially following its latest earnings report.
What Did Crocs' Earnings Report Look Like? No Crocodile Tears Here.
The earnings report, for the quarter ended March 31, delivered in a big way for Crocs and its investors. The company brought in earnings per share figures of $1.49 adjusted, which beat the consensus revenue target of $0.89 at Refinitiv by better than half again the expected figure. Revenue, meanwhile, also landed a significant beat, coming in at $460.1 million for the quarter against the expected $415 million. First-quarter net income saw gains as well, up to $98.4 million. That may not look impressive until you compare it to the figures from a year prior, when the company brought in $11.1 million.
One of the biggest drivers of these massive gains was Crocs' digital sales operations. Reports noted that digital sales were up 75.3%, which drove the total share of online revenue to 32.3% of total revenue, nearly one dollar in three outright. That's up from 30.1% a year prior, which shows that Crocs was more than ready to repel the hits caused by a near-complete loss of physical retailers for large portions of a year.
Crocs doesn't expect sales to slow much, either; the shoemaker is looking for sales to grow between 60% and 70% in the second quarter as compared to last year. Though the second quarter of last year, which was neck-deep in Covid-19 restrictions almost everywhere, likely won't present a difficult target to beat. Given that financial analysts were looking for 39.2% growth, though, Crocs is likely to surpass that readily and really show up the second quarter 2020 numbers.
The Financial Analyst Perspective Finds a Good Fit in CROX Stock
As for the broader perspective from financial analysts—as based on our latest research—Crocs stock is likely to be as good a fit as its shoes. CROX stock has held a consensus buy rating for the last two years, and the ratios haven't even changed all that much in the meantime.
A year ago, Crocs stock had seven “buy” ratings and two “hold” to its credit. In July 2020, the ratio shifted to eight “buy” ratings and three “hold”, and it's been there ever since. That by itself is no mean feat; normally, ratios tend to change unless it's a company that's minimally rated. For a company to hold the same ratio of buyers to holders for almost a year is a big surprise.
The price target, meanwhile, occupies a decent range. The current average price target is $83.33, with a high of $100 and a low of $53. The low goes back to July 2020, as Susquehanna Bancshares reiterated a “buy” rating but left the $53 price target in place. The high, however, is recent, posted by Pivotal Research back in early March. 2021 has been a big year for price target hikes on Crocs stock, as seven analysts have bumped targets up this year so far.
Plastic-ish Platforms With Popular Pitchmen Prove Palatable
Crocs has worked hard to maintain its brand presence among the younger set, as exemplified by its recent connection to Justin Bieber, who will soon be bringing out a second shoe with the company as noted previously. Bieber referring to “Crocs with socks” as “definitely the move” certainly won't hurt sales much, and when a celebrity calls something “fashionable,” it's safe to say there will be a rush to emulate same, because celebrities do tend to know from fashion. It tends to come with the position. Throw in other celebrities like Post Malone, Ruby Rose and Drew Barrymore, and Crocs has its promotional opportunities well since set.
Crocs managed to capitalize well on the pandemic, using it as an opportunity to not only promote a comfortable shoe but also one that celebrities seem fond of. We all know what a rush there's been to comfortable clothing these days, especially as the sartorial alchemy labs that are modern businesses today have stopped demanding ties and pressed slacks as the only fashion choices that won't drive down stock prices. Throw in a robust online shopping operation that was already turning in solid value and the whole picture only improves.
As long as Crocs aren't particularly painful to wear, or lose a lot of their celebrity cachet, there's little reason to suggest that Crocs won't carry on selling. They'll likely have consumer inertia on their side for a while—customers saying “I bought Crocs last time and they worked fine so I'll buy them again” is a big part of consumer goods purchase motivation—and factored in with everything else, that suggests Crocs will continue selling for some time to come. That's great news for investors, and that makes picking up the company's stock well worth considering.
Companies in This Article:
