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Here's What Makes Crocs (CROX) an Investor-Favorite Pick

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Crocs, Inc. (CROX - Free Report) is one stock that has seen the shift to casual wear trend work in its favor. The company’s portfolio, which focuses on comfort and style through its iconic clog material, has been witnessing strength as consumers are confined to their homes during the pandemic. Crocs offers a wide variety of footwear products, including sandals, wedges, flips and slides that cater to people of all ages.

Backed by the aforementioned positives, shares of this Zacks Rank #1 (Strong Buy) company have gained 24% year to date compared with the industry’s growth of 2.6%. It has also comfortably outpaced the Consumer Discretionary sector and S&P 500’s growth of 5.4% and 3.6%, respectively, over the same period.

 


 

Additionally, the company’s expected long-term earnings growth rate of 15% and VGM Score of B indicate that the stock is likely to retain positive momentum in the days ahead.

Factors Driving the Rally

Crocs’ top line has been particularly witnessing momentum, driven by solid performance in the Americas and the EMEA region, with a healthy demand in its key products, including Clogs, Sandals, Jibbitz and Visible Comfort technology. Going ahead, it remains on track with product launches and partnerships, including global launches with Justin Bieber and Post Malone to a collaboration agreement with Rare Market in Korea. Notably, Crocs expects continued momentum in brands and robust growth in all regions.

Additionally, Crocs is making significant progress in expanding digital and omni-channel capabilities. Notably, the company witnessed a strong online show amid the coronavirus pandemic, which aided the top line in fourth-quarter 2020.

Even as stores remained open, it witnessed strong online demand and leveraged its omni-channel capabilities to fulfill online orders and serve customers. This resulted in a 92% year-over-year increase in digital sales in the fourth quarter, marking the 15th successive quarter of double-digit growth. The solid momentum in the digital platform is likely to continue in the days ahead as consumers are increasingly shifting to online shopping.

Moreover, investors were pleased with its favorable view for the first quarter and 2021. First-quarter 2021 revenues are envisioned to grow 40-50%. Also, adjusted operating margin is projected to be 17-18%. For 2021, it continues to expect revenue growth between 20% and 25%.

The Zacks Consensus Estimate for first-quarter 2021 earnings has moved up 72% to 86 cents in the past 30 days. Moreover, this suggests a substantial increase from 22 cents reported in the year-ago quarter. Further, the consensus mark for revenues is pegged at $414.5 million, indicating growth of 47.4% from the figure reported in the year-ago quarter.

For 2021, the consensus mark for earnings is pegged at $3.89 per share, suggesting year-over-year growth of 20.8%. Moreover, earnings estimates have moved north by 3.7% in the past 30 days. The consensus estimate for revenues stands at $1.72 billion, indicating year-over-year growth of 24.3%.

Other Stocks to Watch

Gildan Activewear, Inc. (GIL - Free Report) has an expected long-term earnings growth rate of 9%. The company sports a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

PVH Corp. (PVH - Free Report) has an expected long-term earnings growth rate of 18%. It presently has a Zacks Rank #2 (Buy).

Kontoor Brands, Inc. (KTB - Free Report) , also a Zacks Rank #2 stock, has an expected long-term earnings growth rate of 6%.

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PVH Corp. (PVH) - free report >>

Crocs, Inc. (CROX) - free report >>

Gildan Activewear, Inc. (GIL) - free report >>

Kontoor Brands, Inc. (KTB) - free report >>