Crocs, Inc. (CROX Quick QuoteCROX - Free Report) is well poised for growth courtesy of growth in consumer demand for new clogs and sandals, continued momentum in the Crocs and HEYDUDE brands and strong direct-to-consumer (“DTC”) sales. The company’s focus on comfortable offerings has resonated with consumers, driving brand expansion and attracting customers to its products.

This Zacks Rank #2 (Buy) company has a market capitalization of $6.2 billion. Over the past year, it surged by 38.8% compared with the industry’s increase of 2.2%.

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Let’s delve into the factors that have been aiding this stock for a while now.

Business Strength: Crocs came up with impressive second-quarter 2023 results, wherein the top and bottom lines grew year-over-year. In the quarter, the company’s revenues increased by 11.2% year over year to $1,072.4 million, driven by growth across all regions and channels. The Crocs brand’s revenues grew 13.8% year over year to $833 million, including a 25.3% increase in DTC revenues and a 3.8% rise in wholesale revenues.

Acquisition Benefits: The company’s acquisition of HEYDUDE (in February 2022) has been augmenting its fast-growing footwear business. With the addition of HEYDUDE’s consumer-insight-driven casual, comfortable and lightweight product offerings, Crocs has strengthened and expanded its product portfolio. The acquisition has added to the company’s digital penetration, as HEYDUDE already has a strong online presence.

It is worth noting that in the second quarter, HEYDUDE’s revenues advanced 3% year over year to $239.4 million. For 2023, the company expects revenues from the HEYDUDE brand to grow in the range of 14%-18% on a reported basis. Management also remains optimistic about HEYDUDE, which is likely to achieve its sales target of $1 billion this year.

Raised Outlook: CROX raised its guidance for 2023, driven by solid momentum in its business. For the year, it anticipates revenues to grow 12.5-14.5% (from the previously projected 11-14%) to $4,000-$4,065 million. Adjusted earnings are now anticipated in the range of $11.83-$12.22 per share compared with the previous guidance of $11.17-$11.73. The adjusted operating margin is projected to be 27.5%, higher than 26-27%, projected earlier.

For third-quarter 2023, Crocs expects to generate revenues of $1,013-$1,034 million, indicating year-over-year growth of 3-5%. Adjusted earnings are envisioned in the range of $3.07-$3.15 per share, with an adjusted operating margin of 27%.

Financial Flexibility: Crocs has been focusing on reducing debt for a while now. As of Jun 30, 2023, it had long-term borrowings of $2,007.5 million, down 10.8% on a sequential basis. Crocs resumed its share repurchase program with $50 million of share buybacks in July.

Other Stocks to Consider

Here we have highlighted three other top-ranked stocks from the same space.

Abercrombie & Fitch (ANF Quick QuoteANF - Free Report) , a specialty retailer, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

ANF has a trailing four-quarter earnings surprise of 724.8%, on average. The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales suggests growth of 10.1% from the year-ago reported figure.

Alto Ingredients (ALTO Quick QuoteALTO - Free Report) , a producer of specialty alcohols and essential ingredients, has a Zacks Rank #2 at present.

ALTO delivered an earnings surprise of 242.9% in the last reported quarter. The Zacks Consensus Estimate for ALTO’s upcoming quarter’s EPS indicates growth of 125% from the previous year’s reported figure.

American Eagle Outfitters (AEO Quick QuoteAEO - Free Report) , a retailer of casual apparel, accessories and footwear, currently carries a Zacks Rank #2. AEO delivered an average earnings surprise of 9.2% in the last four quarters.

The Zacks Consensus Estimate for American Eagle Outfitters’ current financial-year EPS indicates a jump of 8.3% from the year-ago reported figure.