Despite Solid Q1 Performance, Crocs Puts Investors on Slippery Slope

Crocs, Inc. (CROX) has reported stronger-than-expected first-quarter 2022 results. The company engages in the design, development, manufacturing, worldwide marketing, sale and distribution of casual footwear, apparel and accessories.

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Shares of the company fell 9.1% on Thursday but recovered 2.1% in the extended trading session. Perhaps, weaker-than-expected revenue estimates disappointed investors.

Results in Detail

Adjusted earnings increased 37.6% to $2.05 per share and surpassed analysts’ estimates of $1.55 per share.

Similarly, quarterly revenues grew 43.5% year-over-year to $660.1 million, surpassing analysts’ estimates of $622.2 million. The solid revenue growth was aided by a 34.6% rise in Crocs’ Direct-to-Consumer business and a 48.7% increase in its Wholesale business.

The company was able to build its online presence during the quarter. Crocs Brand digital sales climbed 20.3% and accounted for 32.8% of Crocs Brand revenues, compared to 32.3% in the year-ago quarter.

Outlook

For the second quarter, Crocs forecasts revenues (including HEYDUDE revenues) to be between $918 million and $957 million, below the consensus estimate of $962.1 million.

For full-year 2022, total revenues are expected to be about $3.5 billion. The consensus estimate for the same stands at $3.4 billion. Revenues for Crocs are expected to increase 20% compared to 2021. Further, revenues from HEYDUDE are expected between $700 million and $800 million.

Adjusted earnings are projected to be in the range of $10.05 to $10.65 per share, compared with the previous guidance of $9.70 to $10.25 per share and analysts’ expectations of $9.98 per share.

Stock Rating

Responding to Crocs’ results, Loop Capital Markets analyst Laura Champine maintained a Hold rating on the stock but lowered the price target to $75 (14.3% upside potential) from $80.

Overall, CROX stock commands a Moderate Buy consensus rating based on three Buys and three Holds. Crocs’ average price target of $126.83 implies 93.3% upside potential to current levels.

Insider Trading

Based on the recent corporate insider activity, corporate insider sentiments seem to be Very Positive on Crocs. This means that over the past quarter there has been an increase in insiders buying shares of CROX.

Takeaway

The company is confident about its performance in the near term, as it has raised guidance of some metrics for full-year 2022. Further, the bullishness of insiders and bloggers keeps us optimistic. Since the stock is down 50.3% year-to-date, investors may find it attractive.

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