Yahoo Finance Crocs (CROX) Rallies 53% in Past Three Months: Here's Why
Crocs, Inc. CROX seems a promising pick now on the back of its robust business strategies. The company has been gaining from solid consumer demand across the Crocs and HEYDUDE brands, backed by effective pricing actions. Buoyed by such upsides, this current Zacks Rank #2 (Buy) company has gained 53% in the past three months against the industry’s 9.2% drop.
The Zacks Consensus Estimate for 2024 sales and earnings per share (EPS) is currently pegged at $4.1 billion and $12.38, respectively. These estimates show corresponding growth of 3.9% and 2.9% year over year. The consensus mark for 2025 sales and EPS is currently pegged at $4.3 billion and $13.54, respectively, indicating year-over-year growth of 4.9% and 9.3%. A VGM Score of A further adds strength.
Let’s Delve Deep
Crocs has been seeing strength in clogs, sandals and personalization for a while now. Each of the three categories grew double digits in 2023. In 2023, the HEYDUDE brand delivered revenues of nearly $950 million and more than $200 million in operating income. The company’s Jibbitz business has also been doing well for quite some time now. This business increased 17% to more than $0.25 billion, accounting for roughly 9% of the total mix in 2023.
Management continues to view personalization as a mega-consumer trend, with the opportunity to expand the Jibbitz penetration in 2024 via better wholesale execution, deeper international penetration and advanced speed-to-market capabilities.
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Crocs has been witnessing a decline in inbound freight costs, which has been contributing to gross margins for quite some time now. Also, favorable ocean freight rates, the absence of air freight and lower promotional activity in the Crocs brand have been acting as tailwinds. In fourth-quarter 2023, the adjusted gross profit rose 6.1% year over year while the adjusted gross margin expanded 240 basis points to 55.7%, owing to gains from lower freight costs across both brands.
Such factors make us optimistic about the future. Crocs had earlier outlined its long-term strategy and key initiatives to deliver sustainable growth. It had expected to generate revenues of more than $5 billion by 2026, anticipating to witness a compounded annual growth rate of more than 17% by 2026. It expected to attain the revenue target driven by strong digital sales, improved market share for sandals, growth in Asia and innovative product and marketing. Management targets four times revenue growth in sandals by 2026.
The company targets at least 50% of total revenues to come from digital channels by the end of 2026. Driven by strong revenue growth, it anticipates improved profitability and cash flows through 2026.
To wrap up, Crocs seems to be an attractive investment bet given all the aforementioned positives.
Eye These Solid Picks
Some better-ranked companies are Ralph Lauren RL, Royal Caribbean RCL and lululemon athletica LULU.
Ralph Lauren, a footwear and accessories dealer, sports a Zacks Rank #1 (Strong Buy), at present. RL has a trailing four-quarter earnings surprise of 18.7%, on average.
The Zacks Consensus Estimate for Ralph Lauren’s current financial-year sales and EPS suggests growth of 2.7% and 22.7%, respectively, from the year-ago corresponding figures. You can see the complete list of today’s Zacks #1 Rank stocks here.
Royal Caribbean sports a Zacks Rank of 1, at present. RCL has a trailing four-quarter earnings surprise of 26.4%, on average.
The Zacks Consensus Estimate for RCL’s 2024 sales and EPS indicates increases of 14.7% and 47.9%, respectively, from the year-ago period’s reported levels.
lululemon athletica is a yoga-inspired athletic apparel company. LULU carries a Zacks Rank #2 (Buy), at present.
The Zacks Consensus Estimate for lululemon athletica’s current financial-year sales and EPS suggests growth of 12.1% and 11.2%, respectively, from the year-ago corresponding figures. LULU has a trailing four-quarter earnings surprise of 9.7%, on average.
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Royal Caribbean Cruises Ltd. (RCL) : Free Stock Analysis Report
Ralph Lauren Corporation (RL) : Free Stock Analysis Report
lululemon athletica inc. (LULU) : Free Stock Analysis Report
Crocs, Inc. (CROX) : Free Stock Analysis Report
