A month has gone by since the last earnings report for Crocs (CROX Quick QuoteCROX - Free Report) . Shares have lost about 3.1% 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 drivers.

Crocs Q4 Earnings & Revenues Beat on Strong Demand

Crocs continued with its impressive performance in fourth-quarter 2021. Both top and bottom lines not only surpassed the Zacks Consensus Estimate but also improved year over year. Solid consumer demand, as well as broad-based growth across all markets, channels and categories, contributed to the quarterly results. Clogs, sandals and Jibbitz remained key growth drivers. However, factory closures in Vietnam last year, along with continued extended transit times, are likely to have adverse impacts on supply and product introductions for the first half of 2022.

Q4 in Detail

Crocs’ adjusted earnings were $2.15 per share, surpassing the Zacks Consensus Estimate of $2.01. The figure also surged significantly from earnings of $1.06 in the year-ago period, owing to robust margins.

Revenues advanced 42.6% (or 43.5% on a constant-currency basis) year over year to $586.6 million in the reported quarter and handily beat the Zacks Consensus Estimate of $585 million. The company registered revenue growth of 123.1% on a two-year stack basis. The average selling price was $25.71 for the quarter, reflecting a year-over-year increase of 18.9%.

Direct-to-consumer revenues rose 44.5% year over year to $319.5 million, driven by higher traffic and robust average transaction value. Wholesale revenues rallied 40.3% to $267.1 million in the quarter under review on the back of high double-digit growth in all sub-channels.

Digital sales advanced 48% year over year and accounted for 40.3% of revenues. The metric also surged 122% on a two-year basis, representing 37% of revenues. Increased focus on the Crocs mobile app and global social platforms aided digital sales.

Total revenues in the Americas region were up 51.2% (51.2% at constant currency) to $469 million. Revenues in the Asia-Pacific region amounted to $57.1 million, reflecting a year-over-year increase of 10.3% (13.5% at constant currency). The EMEA region witnessed revenue growth of 22.5% (26.8% at constant currency) to $60.5 million.

The adjusted gross profit soared 62.4% to $373.7 million. The adjusted gross margin expanded 770 basis points (bps) to 63.4% on the back of price increases, fewer promotional activities, and a positive product mix. The metric witnessed improvement in all regions and channels. Adjusted SG&A expenses grew 43.2% to $205.7 million. Meanwhile, adjusted SG&A expenses, as a percentage of revenues, expanded 20 bps to 35.1%.

Adjusted operating income of $168.1 million increased significantly from $87 million in the prior-year quarter. Adjusted operating margin expanded to 28.6% from the prior-year quarter’s 21.1%. The uptick can be attributable to the gross margin improvement, which somewhat offset the SG&A rise.

Financial Details

Crocs ended the quarter with cash and cash equivalents of $213.2 million, long-term borrowings of $771.4 million, and stockholders’ equity of $14.1 million. The company’s liquidity position remains strong, with $414.7 million in available borrowing capacity.

Management incurred a capital expenditure of $55.9 million in 2021. The company anticipates a capital expenditure of $170-$200 million for supply-chain investments in 2022.

Crocs repurchased 8.2 million shares worth $1 billion in 2021. The company has $1.1 billion of share repurchase authorization remaining for future buybacks. It also revealed plans to borrow $50.0 million under its existing credit facility, which will increase the borrowing capacity thereunder by $100.0 million.

Outlook

Management issued the guidance for the first quarter and 2022. The company expects revenue growth (excluding HEYDUDE) of more than 20% for 2022. This compares unfavorably with the prior year’s revenue growth of nearly 67%. Revenues related to the HEYDUDE buyout are likely to be $620-$670 million on a reported basis. Adjusted earnings are envisioned to be $9.7-$10.25. The adjusted operating margin is anticipated to be 26%. However, air freight costs of $75 million are likely to hurt gross margins in the first half of 2022.

For first-quarter 2022, revenues are projected to grow 31-37% to $605-$630 million, provided the HEYDUDE buyout completes by February 2022. In the prior-year quarter, it reported revenue growth of 64% to $460.1 million. Excluding the HEYDUDE acquisition, revenues are likely to be $520-$535 million, which reflects organic growth of 13-16%. The adjusted operating margin is estimated to be 22%, including air freight expenses of $30 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month.

VGM Scores

At this time, Crocs has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 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

Crocs has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.