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Why Is Crocs (CROX) Down 5.8% Since Last Earnings Report?
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It has been about a month since the last earnings report for Crocs (CROX - Free Report) . Shares have lost about 5.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Crocs due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Crocs Q4 Earnings and Revenues Surpass Estimates
Crocs reported better-than-expected fourth-quarter 2020 results, wherein both top and bottom lines increased year over year. Despite a tough retail environment due to the COVID-19 pandemic, brand strength and strong cash flow contributed to quarterly growth.
Notably, the company marked its highest revenue and adjusted operating profit in its history in the said quarter. Going ahead, it remains on track with new product launches and strategic partnerships, including global launches with Justin Bieber and Post Malone to a collaboration agreement with Rare Market in Korea. That said, Crocs expects continued momentum in brands and robust growth in all regions.
Encouragingly, management issued an upbeat guidance for the first quarter of 2021 and reiterated its sales view for 2021.
Q4 Highlights
Crocs’ adjusted earnings came in at $1.06 during fourth-quarter 2020, surpassing the Zacks Consensus Estimate of 82 cents. Moreover, the figure surged significantly from 12 cents in the year-ago quarter.
Revenues increased 56.5% (56.1% in constant-currency) to $411.5 million in the reported quarter and exceeded the Zacks Consensus Estimate of $394 million. Wholesale and retail revenues improved 52.2% and 40.9% year over year, respectively. Solid performance in the Americas and the EMEA region along with healthy demand in its key products, including Clogs, Sandals, Jibbitz and Visible Comfort technology, drove the top line. Apart from these, e-commerce grew 92% year over year in the quarter under review, marking the 15th successive quarter of double-digit growth.
The company’s adjusted gross profit advanced 27.9% to $230.6 million. Moreover, adjusted gross margin expanded 670 basis points (bps) to 56% on the back of a favorable product mix along with fewer promotional activities and discounts.
Also, adjusted SG&A expenses grew 23.1% to $143.6 million in the fourth quarter. Meanwhile, adjusted SG&A, as a percentage of sales, contracted 950 bps to 34.9%.
Adjusted operating income came in at $87 million, up from $12.9 million in the last-year quarter. Moreover, adjusted operating margin expanded to 21.1% from the prior-year quarter’s 4.9%. The uptick can be attributable to lower SG&A costs, robust sales and improved gross margins.
Segments at a Glance
Total revenues in the Americas region were up 99.2% (100.5% at constant currency) to $310.3 million in the fourth quarter. Also, revenues in the EMEA region came in at $49.4 million, increasing 14.9% (11.4% in constant-currency) year over year. However, the Asia-Pacific region witnessed a revenue decline of 19.5% (22.1% at constant-currency) to $51.8 million.
Financial Details
Crocs ended 2020 with a cash balance of $135.8 million. The company generated $266.9 million in cash from operating activities. Further, it incurred capital expenditures of $42 million and the metric is expected to be roughly $100-$130 million in 2021.
Further, it repurchased 1.7 million shares worth $131.7 million under its $1-billion share repurchase plan. As of Dec 31, 2020, management has $337.8 million remaining in its existing share repurchase program.
The company also has $180 million available for borrowing under its credit facility as of Dec 31. This brings the liquidity level to $319.4 million, which is likely to help the company stay afloat amid this pandemic.
Outlook
Driven by solid fourth-quarter results, management envisions first-quarter 2021 revenues to grow 40-50%, which is significantly higher than an estimated growth of 25.5% suggested by the Zacks Consensus Estimate. Further, gross margin is likely to be negatively impacted by a $3-million investment related to distribution centers. Also, adjusted operating margin is projected to be 17-18%.
For 2021, it continues to expect revenue growth between 20% and 25%, which appears favorable when compared with a 22.2% growth suggested by the Zacks Consensus Estimate. Moreover, adjusted operating margin is anticipated to be 18-19%, with $12-$15 million of distribution center investments expected to affect the gross margin.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 72.5% due to these changes.
VGM Scores
At this time, Crocs has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Crocs has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Why Is Crocs (CROX) Down 5.8% Since Last Earnings Report?
It has been about a month since the last earnings report for Crocs (CROX - Free Report) . Shares have lost about 5.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Crocs due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Crocs Q4 Earnings and Revenues Surpass Estimates
Crocs reported better-than-expected fourth-quarter 2020 results, wherein both top and bottom lines increased year over year. Despite a tough retail environment due to the COVID-19 pandemic, brand strength and strong cash flow contributed to quarterly growth.
Notably, the company marked its highest revenue and adjusted operating profit in its history in the said quarter. Going ahead, it remains on track with new product launches and strategic partnerships, including global launches with Justin Bieber and Post Malone to a collaboration agreement with Rare Market in Korea. That said, Crocs expects continued momentum in brands and robust growth in all regions.
Encouragingly, management issued an upbeat guidance for the first quarter of 2021 and reiterated its sales view for 2021.
Q4 Highlights
Crocs’ adjusted earnings came in at $1.06 during fourth-quarter 2020, surpassing the Zacks Consensus Estimate of 82 cents. Moreover, the figure surged significantly from 12 cents in the year-ago quarter.
Revenues increased 56.5% (56.1% in constant-currency) to $411.5 million in the reported quarter and exceeded the Zacks Consensus Estimate of $394 million. Wholesale and retail revenues improved 52.2% and 40.9% year over year, respectively. Solid performance in the Americas and the EMEA region along with healthy demand in its key products, including Clogs, Sandals, Jibbitz and Visible Comfort technology, drove the top line. Apart from these, e-commerce grew 92% year over year in the quarter under review, marking the 15th successive quarter of double-digit growth.
The company’s adjusted gross profit advanced 27.9% to $230.6 million. Moreover, adjusted gross margin expanded 670 basis points (bps) to 56% on the back of a favorable product mix along with fewer promotional activities and discounts.
Also, adjusted SG&A expenses grew 23.1% to $143.6 million in the fourth quarter. Meanwhile, adjusted SG&A, as a percentage of sales, contracted 950 bps to 34.9%.
Adjusted operating income came in at $87 million, up from $12.9 million in the last-year quarter. Moreover, adjusted operating margin expanded to 21.1% from the prior-year quarter’s 4.9%. The uptick can be attributable to lower SG&A costs, robust sales and improved gross margins.
Segments at a Glance
Total revenues in the Americas region were up 99.2% (100.5% at constant currency) to $310.3 million in the fourth quarter. Also, revenues in the EMEA region came in at $49.4 million, increasing 14.9% (11.4% in constant-currency) year over year. However, the Asia-Pacific region witnessed a revenue decline of 19.5% (22.1% at constant-currency) to $51.8 million.
Financial Details
Crocs ended 2020 with a cash balance of $135.8 million. The company generated $266.9 million in cash from operating activities. Further, it incurred capital expenditures of $42 million and the metric is expected to be roughly $100-$130 million in 2021.
Further, it repurchased 1.7 million shares worth $131.7 million under its $1-billion share repurchase plan. As of Dec 31, 2020, management has $337.8 million remaining in its existing share repurchase program.
The company also has $180 million available for borrowing under its credit facility as of Dec 31. This brings the liquidity level to $319.4 million, which is likely to help the company stay afloat amid this pandemic.
Outlook
Driven by solid fourth-quarter results, management envisions first-quarter 2021 revenues to grow 40-50%, which is significantly higher than an estimated growth of 25.5% suggested by the Zacks Consensus Estimate. Further, gross margin is likely to be negatively impacted by a $3-million investment related to distribution centers. Also, adjusted operating margin is projected to be 17-18%.
For 2021, it continues to expect revenue growth between 20% and 25%, which appears favorable when compared with a 22.2% growth suggested by the Zacks Consensus Estimate. Moreover, adjusted operating margin is anticipated to be 18-19%, with $12-$15 million of distribution center investments expected to affect the gross margin.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 72.5% due to these changes.
VGM Scores
At this time, Crocs has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Crocs has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.