The Exchange

Crocs: Buy Stock in the Slip-On Shoemaker, Analyst Says

The Exchange

What is this, 2007? Sterne Agee came out with positive comments Thursday on Crocs (CROX), the Niwot, Colo., maker of shoes with holes in them, that half a decade ago had a cult following before cratering.

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Crocs Shoe: Credit Getty Images
The firm believes you should get long the stock, and it's happy affirming a previously issued buy rating and a $30 target. That's well above the $23.86 consensus price shown on FactSet, and it's 85% above where the stock closed in the prior session.

But if you remember back a few years, it's also nowhere near the prices Crocs once knew.

Crocs, now 10 years old, hit its all-time high of $74.75 on Oct. 31, 2007 -- just over a year later it was trading for $1. Clearly, it's a long way from those top days for the stock, as the chart below shows, but in fairness, it's seen a lot worse too.

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Crocs Chart

Sterne Agee's backing, which looks to be the high estimate on Wall Street, helped the shares end the day up 40 cents, or 2.5%, at $16.61. After Sterne, the next-highest target is from Piper Jaffray at $29. The low is $19.

Crocs reports third-quarter earnings next Wednesday, and it's only days away from putting out its new Retro line of flip flops and clogs. For this year, it's expected to top $1 billion in sales for the second straight year.

It hasn't always been even for Crocs on the top or bottom lines since those pre-recession days, as seen below, but since 2009 got out of the way, many metrics -- sales and earnings included -- have been on the rise. No question that's been a big part of the stock recovering from its single-digit doldrums.

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Crocs Sales

While the shares have indeed come off their darkest days of late 2008, they do remain 65% below peak. For the year to date, the stock is up 8.4%, Yahoo! Finance data show, though it's trading below its 52-week high of $22.59. As for the multiple, with a price-to-earnings ratio of 9.5, Crocs trades below several other big footwear stocks, including Nike (NKE), though it does exceed Deckers (DECK), which comes in at 8.3.

For next week's quarterly earnings report, Crocs is expected to report sales of $302.1 million, with earnings of 43 cents a share, according to FactSet.

Can Retro take the stock to where it was? You tell us. Is Crocs coming back or has it already gained enough since its all-time low?

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