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Is Crocs, Inc. (CROX - Free Report) making a comeback? This Zacks Rank #1 (Strong Buy) is expected to see positive earnings in 2018 for the first time in 4 years.

Crocs makes casual footwear for men, women and children. Everyone knows their Croslite material, a proprietary technology which gives each pair of shoes a soft, lightweight feel. Crocs became famous for its clogs, which went out of fashion, but, recently started to make a comeback.

It also operates retail stores.

Beat in the Second Quarter

Crocs reported second quarter results on Aug 10 and beat the Zacks Consensus for the second quarter in a row. Earnings were $0.27 versus the Zacks Consensus of $0.15.

Revenues fell 2.7% to $313.2 million, but it was at the high end of the company's guidance.

Gross margin rose 180 basis points to 54.2% compared to the year ago quarter due to improved product and better management of inventory.

It also saw a favorable response to its Spring/Summer 2017 collection, especially its clogs and sandals.

Even men's fashion bible, GQ Magazine, highlighted that men were wearing Crocs clogs again this summer.

Turnaround Still Ongoing

In March 2017, Crocs announced it was closing about 25% of its stores.

By the end of 2018, it expects to have about 400 stores versus 558 at the end of 2016.

This is part of its turnaround plan which also includes focusing on its core molded products and reducing inventory.

Estimates for 2017 and 2018 Rise

Analysts are liking what they are seeing and getting more bullish on the company.

Although sales are expected to drop by about 2.2% this year, they expect a rebound of 3% in 2018.

The estimates are now on the rise. The 2017 Zacks Consensus Estimate has jumped to a loss of $0.03 from a loss of $0.07 over the last 30 days. That's still an improvement from 2016 where the company lost $0.36.

By 2018, analysts expect the company to be back in the green as far as earnings, with the Zacks Consensus jumping to $0.30 from $0.22 over the last month.

Have the Shares Bottomed?

Things have looked grim over the past few years for shareholders as the shares have dropped 46% over the last 5 years.



But there's been a rebound in 2017, as the stock has jumped 39% year-to-date.

Since it is expected to have negative earnings, it doesn't have a P/E for this year. But using 2018's estimates, it's trading with a forward P/E of 31.

For investors looking for a retail turnaround story, and a stock under $10, then Crocs is one to keep on the short list.

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