) has been a Zacks Rank #5 (Strong Sell) longer than any other
stock. That is due to declining estimates and an earnings miss.
With earnings right around the corner, will Crocs get going on the
Two Time Bear
Over the last 4 months, Crocs has been the Bear of the Day two
times. This makes three, and since the new format of bear of the
Day that is a record that no one really wants to have.
June 14 Bear of the Day article
telegraphed a bad quarter was in the offing. The company tripped up
in reporting $0.48 in earnings when Wall Street was looking for
$0.64. That means they came in $0.16 below estimates for a 25%
negative earnings surprise.
August 8 Bear of the Day article
talked more potential pressure in margins for the footwear maker.
Croc makes and distributes footwear, apparel and accessories. It
designs and sells a range of footwear and accessories that utilize
its proprietary closed cell-resin, called Croslite. As of December
31, 2012, it operated 121 kiosks located in malls and other high
foot traffic areas; 287 retail stores; 129 outlet stores; and 43
Web stores. The company was founded in 1999 and is headquartered in
Estimates Moving Lower
The company is expected to report earnings again on October 30
after the close. The Zacks Consensus Estimate is calling for
earnings of $0.17 on revenue of $292M. Last year, the company
reported $296M in revenue and $0.49 in earnings, so investors
should be ready for the headline shock of lower revenue and
The four most recent earnings adjustments have all been lower, with
analysts coming in with earnings estimates of $0.15 to $0.19. It
should be noted that the high end estimate is coming from the
analyst that has been the most accurate of late. Still, the
majority of analysts have been lowering their numbers as the
quarter ended and just ahead of the earnings report date.
With low expectations, CROX is finding that it has a similar
valuation. Many value investors will tell you that just because
something looks good on the valuation metrics, doesn't mean it
won't get cheaper.
A forward PE of 14x is well below the industry average of 20.6x and
a similar discount can be found in price to book and price to
After seeing earnings contract roughly 36% for 2013, analysts are
calling for an impressive turnaround in 2014. The implied earnings
growth rate of 20% for next year is well ahead of the 15.6%
industry average despite expected sales growth of 7.5% vs the 9.4%
Walk A Mile In Crocs
The fad that was Crocs seems to have come and gone. In some circles
it might even be "unpopular" to sport rubber like shoes. The real
problem here is that while this may be a shunned brand, the
analysts might have taken it a bit too far.
Guidance is calling for revenue between $300M and $310M in
revenues, and the Zacks Consensus is full $8M below the bottom end
of that range. A beat on the topline is just what the company needs
to get things rolling again, but if they step in it again, we could
see my shoe size as their stock price.
Brian Bolan is a Stock Strategist for Zacks.com. He is the Editor
in charge of the
Run Investor service
, a Buy and Hold service where he recommends the stocks in the
Brian is also the editor of
Breakout Growth Trader
a trading service that focuses on small cap stocks and also carries
a risk limiting strategy. Subscribers get daily emails along with
buy, and sell alerts.
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