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Buy Crocs (CROX) Stock Ahead of Q2 Earnings?

Christopher Vargas

Crocs CROX is set to report its second quarter earnings on August 1 before the opening bell. The company is coming off a strong quarter earnings wise and is looking to follow up with another solid performance in Q2. Shares are currently down 8.6% year-to-date but over the past four weeks, the company rallied 20.9%. Can the shoe maker carry on this recent momentum into the second half of 2019 with a strong Q2 earnings report? Let’s take a closer look into how the company performed in the first quarter and what to expect from them in Q2.

Company Overview and Q1 Recap 

Crocs is one of the leading companies in manufacturing innovative casual footwear for men, women, and children. The company offers a broad portfolio of all-season products while remaining loyal to its molded footwear heritage. The company’s coveted ‘Clog’ shoe is widely recognized as they have reached high levels of popularity because of its unique look and comfort. Their Clog shoe is their most iconic product and is at the forefront of their marketing efforts. The footwear giant has released their Clog shoe in a variety of different colors and themes, encouraging their consumers to take pride in being unique. The company has also ventured into sandals that are made from the same Croslite material that the company is revered for.

In the first quarter of fiscal 2019, the company was able to bring in $295.9 million in revenue for a year over year increase of 4.52%. On the earnings front, they were able to report EPS of $0.36, beating our Consensus Estimate by 44%. Crocs showed nice profit growth of more than 50%, reporting $24.7 million. Crocs missed our Key Company Metric Estimate for Total Wholesale Revenue by 7.58%, reporting $204.7 million. E-commerce sales also missed our estimates with $33.8 million in revenue, 6.29% less than the estimate. On the other hand, Total Retail revenues were strong with a reported $57.4 million in revenue, beating our estimate by 13.88%.

Q2 Outlook

Can the shoe maker continue their year over year growth in the second quarter? Our Consensus Estimates are currently calling for the company’s bottom line to rally 37.14% with a top line jump of 8.91% to $357.23 million. Our Key Company Metric Estimates are forecasting the footwear giant’s Total Wholesale revenue to bring in $199.7 million for a year over year gain of 21.3%. Estimates are also predicting that E-Commerce revenue will increase 36.4% in Q2 to $87.2 million in sales; E-Commerce is something the company must focus on expanding if it wishes to continue its growth throughout 2019. Additionally, Key Company Metric Estimates are foreseeing Total Retail revenue to fall 17.3% to $82.3 million for Q2.

Crocs is currently sitting at a Zacks Rank #3 (Hold). Looking ahead to the company’s full year outlook, estimates are projecting earnings to increase by 45.35% and sales to jump 6.77% to $1.16 billion. The company is trying to ignite its growth through global social campaigns and digital marketing, and is also attempting to increase its brand awareness and relevance with social engagements through relevant platforms. Crocs seems poised to utilize conventional methods to further its brand which in turn can supplement the company’s growth.

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