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Crocs Hits New 52-Week High: Here's What Driving the Stock

Zacks Equity Research

Crocs, Inc. CROX hits a new 52-week high of $43.79, before closing the session a tad lower at $42.80 on Jan 15. Shares of the Niwot, CO-based company have rallied 30.7% in the past three months, outperforming the industry and Consumer Discretionary sector’s growth of 7.8% and 10.1%, respectively.

The company’s sound fundamentals, strategic endeavors and recently updated fourth-quarter view are likely to have contributed to the rally.

That said, let’s delve deeper into the factors favoring the stock.

 

 

A Sneak Peek 

Crocs’ international collaborations and marketing investments as well as favorable response to product categories such as clogs, sandals and visible comfort technology bode well. Growing consumer demand for Crocs signature clog shoes remains one of the key growth drivers.

Further, the company’s e-commerce business has been improving at a double-digit rate for quite some time now. In fact, the third quarter marked the tenth successive quarter of double-digit e-commerce growth. Moreover, retail and wholesale businesses are performing well, with retail registering the ninth consecutive quarter of positive comps in the third quarter. These apart, the company continues to witness solid performance in the Americas.

Encouragingly, management raised its fourth-quarter 2019 outlook. The company also noted that the said quarter has been the best in its history, backed by brand strength and impressive wholesale sell-through. Notably, fourth-quarter revenues are now anticipated to be $260-$262 million, up from $245-$255 million stated earlier. Notably, the company reported revenues of $216 million in the prior-year quarter.

Croc’s 2019 view also paints a rosy picture.  It anticipates revenue growth of 13% over 2018 revenues of $1,088.2 million and envisions adjusted gross margin of approximately 51%. 

Bottom Line

We expect the Zacks Rank #3 (Hold) company to continue witnessing momentum in 2020. Notably, management continues to anticipate revenue growth of 12-14% for 2020.

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Nike NKE presently has a long-term earnings growth rate of 13.1% and a Zacks Rank #2.

Steve Madden SHOO has a long-term earnings growth rate of 9% and a Zacks Rank #2 at present.

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