Recent market volatility interrupted what might have been a sharp rally in Crocs CROX stock after the leading footwear company posted strong Q2 results last Thursday.
Despite giving back some of its lofty gains this year, Crocs stock is still up +35% to impressively top the broader indexes and many of its Zacks Textile-Apparel Industry peers including Ralph Lauren's RL +11% and Guess GES at -3%.
With Crocs’ growth making its stock one of the top performers in recent years let’s see if it’s time to buy CROX as markets stabilize.
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Recent Performance Overview
There was a lot to like about Crocs’ Q2 report even amid broader economic jitters which could make CROX a viable buy-the-dip candidate.
Crocs Q2 sales rose 4% year over year to a quarterly record of $1.1 billion and slightly edged estimates of $1.05 billion. Gross margin expansion of 330 basis points led to Q2 EPS spiking 12% to $4.01 which also came in 12% above expectations of $3.59 per share.
The company said its strong performance resulted in record free cash flow of $887 million which it utilized to pay down $200 million in debt and repurchased $175 million in common stock.
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The Technical Tape & Valuation
Seeing as Crocs stock has shown the ability to produce extended rallies CROX may certainly catch the attention of technical traders. In this regard, CROX has fallen below its 50-day simple moving average (SMA) of $141 but has shown some resistance in staying above its 200-day SMA of $119.
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Amid the recent selloff, CROX trades at just 9.9X forward earnings and at a noticeable discount to the S&P 500 and its industry average of 16.9X with Ralph Lauren and Guess at 14.8X and 7.8X respectively. CROX also trades noticeably below its five-year high of 48.2X forward earnings and slightly beneath the median of 11.7X during this period.
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Takeaway
For now, Crocs stock lands a Zacks Rank #3 (Hold). However, a buy rating could be on the way as the P/E valuation of CROX is enticing and the trend of earnings estimate revisions has been positive for fiscal 2024 and FY25. .
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Today, See These 5 Potential Home Runs >>Crocs, Inc. (CROX) : Free Stock Analysis Report
Ralph Lauren Corporation (RL) : Free Stock Analysis Report
Guess?, Inc. (GES) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
