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Here's Why Crocs' (CROX) Stock Appears a Promising Bet Now
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Crocs, Inc. (CROX - Free Report) appears well-poised for growth, thanks to its robust business strategies. The company has been gaining from solid consumer demand across the Crocs and HEYDUDE brands, backed by effective pricing actions. In fourth-quarter 2023, its bottom line surpassed the Zacks Consensus Estimate for the 15th consecutive time. Buoyed by such upsides, this currently Zacks Rank #2 (Buy) company has gained 28.7% in the past three months against the industry’s 5.9% drop.
Let’s Delve Deep
Crocs has been seeing strength in clogs, sandals and personalization for a while now. Each of the three categories grew double digits during 2023. In 2023, the HEYDUDE brand delivered revenues of nearly $950 million and more than $200 million in operating income. The company’s Jibbitz business has also been doing well for quite some time now. This business increased 17% to more than $0.25 billion, accounting for roughly 9% of the total mix in 2023.
Management continues to view personalization as a mega-consumer trend, with the opportunity of expanding the Jibbitz penetration in 2024 via better wholesale execution, deeper international penetration and advanced speed to market capabilities.
Image Source: Zacks Investment Research
Crocs has been witnessing a decline in inbound freight costs, which has been contributing to gross margins for quite some time now. Also, favorable ocean freight rates, the absence of air freight and lower promotional activity in the Crocs brand have been acting as tailwinds. In fourth-quarter 2023, the adjusted gross profit rose 6.1% year over year, while the adjusted gross margin expanded 240 basis points to 55.7%, owing to gains from lower freight costs across both brands.
Such factors make us optimistic about the stock. Crocs had earlier outlined its long-term strategy and key initiatives to deliver sustainable growth. It had then expected to generate revenues of more than $5 billion by 2026, representing compounded annual growth rate of more than 17% by 2026. It anticipated attaining the revenue target driven by strong digital sales, improved market share for sandals, growth in Asia and innovative product and marketing. Management expects four times revenue growth in sandals by 2026. The company targets at least 50% of total revenues to come from digital channels by the end of 2026. Driven by strong revenue growth, the company anticipates improved profitability and cash flows through 2026.
To wrap up, Crocs seems to be an attractive investment bet, given all the aforementioned positives. In addition, analysts seem quite optimistic about the company. The Zacks Consensus Estimate for 2024 sales and earnings per share (EPS) is currently pegged at $4.1 billion and $12.38, respectively. These estimates show corresponding growth of 3.9% and 2.9% year over year. The consensus mark for 2025 sales and EPS is currently pegged at $4.3 billion and $13.54, respectively, indicating year-over-year growth of 4.9% and 9.3%. A VGM Score of A further adds strength.
Ralph Lauren, a footwear and accessories dealer, sports a Zacks Rank #1 (Strong Buy), at present. RL has a trailing four-quarter earnings surprise of 18.7%, on average.
The Zacks Consensus Estimate for Ralph Lauren’s current financial-year sales and EPS suggests growth of 2.7% and 22.7%, respectively, from the year-ago corresponding figures. You can see the complete list of today’s Zacks #1 Rank stocks here.
Royal Caribbean carries a Zacks Rank of 2, at present. RCL has a trailing four-quarter earnings surprise of 26.4%, on average.
The Zacks Consensus Estimate for RCL’s 2024 sales and EPS indicates increases of 14.4% and 47.1%, respectively, from the year-ago period’s reported levels.
lululemon athletica is a yoga-inspired athletic apparel company. LULU carries a Zacks Rank of 2, at present.
The Zacks Consensus Estimate for lululemon athletica’s current financial-year sales and EPS suggests growth of 18.4% and 23.8%, respectively, from the year-ago corresponding figures. LULU has a trailing four-quarter earnings surprise of 9.2%, on average.
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Here's Why Crocs' (CROX) Stock Appears a Promising Bet Now
Crocs, Inc. (CROX - Free Report) appears well-poised for growth, thanks to its robust business strategies. The company has been gaining from solid consumer demand across the Crocs and HEYDUDE brands, backed by effective pricing actions. In fourth-quarter 2023, its bottom line surpassed the Zacks Consensus Estimate for the 15th consecutive time. Buoyed by such upsides, this currently Zacks Rank #2 (Buy) company has gained 28.7% in the past three months against the industry’s 5.9% drop.
Let’s Delve Deep
Crocs has been seeing strength in clogs, sandals and personalization for a while now. Each of the three categories grew double digits during 2023. In 2023, the HEYDUDE brand delivered revenues of nearly $950 million and more than $200 million in operating income. The company’s Jibbitz business has also been doing well for quite some time now. This business increased 17% to more than $0.25 billion, accounting for roughly 9% of the total mix in 2023.
Management continues to view personalization as a mega-consumer trend, with the opportunity of expanding the Jibbitz penetration in 2024 via better wholesale execution, deeper international penetration and advanced speed to market capabilities.
Image Source: Zacks Investment Research
Crocs has been witnessing a decline in inbound freight costs, which has been contributing to gross margins for quite some time now. Also, favorable ocean freight rates, the absence of air freight and lower promotional activity in the Crocs brand have been acting as tailwinds. In fourth-quarter 2023, the adjusted gross profit rose 6.1% year over year, while the adjusted gross margin expanded 240 basis points to 55.7%, owing to gains from lower freight costs across both brands.
Such factors make us optimistic about the stock. Crocs had earlier outlined its long-term strategy and key initiatives to deliver sustainable growth. It had then expected to generate revenues of more than $5 billion by 2026, representing compounded annual growth rate of more than 17% by 2026. It anticipated attaining the revenue target driven by strong digital sales, improved market share for sandals, growth in Asia and innovative product and marketing. Management expects four times revenue growth in sandals by 2026. The company targets at least 50% of total revenues to come from digital channels by the end of 2026. Driven by strong revenue growth, the company anticipates improved profitability and cash flows through 2026.
To wrap up, Crocs seems to be an attractive investment bet, given all the aforementioned positives. In addition, analysts seem quite optimistic about the company. The Zacks Consensus Estimate for 2024 sales and earnings per share (EPS) is currently pegged at $4.1 billion and $12.38, respectively. These estimates show corresponding growth of 3.9% and 2.9% year over year. The consensus mark for 2025 sales and EPS is currently pegged at $4.3 billion and $13.54, respectively, indicating year-over-year growth of 4.9% and 9.3%. A VGM Score of A further adds strength.
Eye These Solid Picks Too
Some other top-ranked companies are Ralph Lauren (RL - Free Report) , Royal Caribbean (RCL - Free Report) and lululemon athletica (LULU - Free Report) .
Ralph Lauren, a footwear and accessories dealer, sports a Zacks Rank #1 (Strong Buy), at present. RL has a trailing four-quarter earnings surprise of 18.7%, on average.
The Zacks Consensus Estimate for Ralph Lauren’s current financial-year sales and EPS suggests growth of 2.7% and 22.7%, respectively, from the year-ago corresponding figures. You can see the complete list of today’s Zacks #1 Rank stocks here.
Royal Caribbean carries a Zacks Rank of 2, at present. RCL has a trailing four-quarter earnings surprise of 26.4%, on average.
The Zacks Consensus Estimate for RCL’s 2024 sales and EPS indicates increases of 14.4% and 47.1%, respectively, from the year-ago period’s reported levels.
lululemon athletica is a yoga-inspired athletic apparel company. LULU carries a Zacks Rank of 2, at present.
The Zacks Consensus Estimate for lululemon athletica’s current financial-year sales and EPS suggests growth of 18.4% and 23.8%, respectively, from the year-ago corresponding figures. LULU has a trailing four-quarter earnings surprise of 9.2%, on average.