Factors Likely to Decide Fate of Crocs (CROX) in Q4 Earnings

Crocs, Inc. CROX is scheduled to release fourth-quarter 2020 results on Feb 23. This leading footwear company is likely to have witnessed revenue and earnings growth in the to-be-reported quarter.

The Zacks Consensus Estimate for fourth-quarter earnings has moved up 6.5% to 82 cents in the past 30 days. Moreover, this suggests a substantial increase from 12 cents reported in the year-ago quarter. Further, the consensus mark for revenues is pegged at $408.3 million, indicating growth of 14.5% from the figure reported in the year-ago quarter.

In the last reported quarter, the company delivered an earnings surprise of 38.2%. Moreover, it delivered an earnings surprise of 191.7%, on average, in the trailing four quarters.

Crocs, Inc. Price and EPS Surprise

Crocs, Inc. Price and EPS Surprise

Crocs, Inc. price-eps-surprise | Crocs, Inc. Quote

Factors at Play

Crocs remains focused on four key growth drivers — Clogs, Sandals, Jibbitz and Visible Comfort technology. Management believes that demand for these products will remain robust in the fourth quarter, which is likely to get reflected in the upcoming results. Also, the Americas and EMEA regions have been performing well and are expected to have delivered sturdy results in the fourth quarter as well.

Further, strong online demand, driven by expanded digital and omnichannel capabilities, bodes well. Such upsides are likely to contribute to the top line in the quarter under review.

Recently, the company raised view for the fourth quarter and 2020. Management projected fourth-quarter 2020 revenues to increase nearly 55% to $407-$410 million. Also, it envisioned 2020 revenues of $1,381-$1,384 million, indicating growth of more than 12%.

Moreover, the company’s gross margin is likely to have benefited from a favorable product mix, elevated prices of selective products and fewer promotional activities in the fourth quarter. This along with a lower SG&A expense rate is likely to have resulted in operating margin leverage.

However, the company is not free from cost headwinds stemming from the increased shift to the online platform. Elevated shipping costs due to the surge in online demand remain a drag.

Zacks Model

Our proven model does not conclusively predict an earnings beat for Crocs this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Crocs carries a Zacks Rank #1 but an Earnings ESP of -4.59%.

Stocks Poised to Beat Earnings Estimates

Here are a few companies you may want to consider, as our model shows that these have the right combination to post an earnings beat:

The Aarons Company AAN has an Earnings ESP of +1.28% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Rent-A-Center RCII has an Earnings ESP of +4.09% and a Zacks Rank #2.

lululemon athlectica LULU has an Earnings ESP of +3.03% and a Zacks Rank #3.

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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.

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