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Crocs, Inc. (NASDAQ:CROX) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects. Crocs has also found favour with investors, with the stock up a notable 17% to US$131 over the past week. Could this upgrade be enough to drive the stock even higher?
Following the upgrade, the current consensus from Crocs' seven analysts is for revenues of US$2.3b in 2021 which - if met - would reflect a major 45% increase on its sales over the past 12 months. Statutory earnings per share are presumed to surge 42% to US$8.51. Before this latest update, the analysts had been forecasting revenues of US$2.0b and earnings per share (EPS) of US$5.69 in 2021. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.
It will come as no surprise to learn that the analysts have increased their price target for Crocs 17% to US$148 on the back of these upgrades. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Crocs, with the most bullish analyst valuing it at US$185 and the most bearish at US$115 per share. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Crocs' growth to accelerate, with the forecast 110% annualised growth to the end of 2021 ranking favourably alongside historical growth of 6.0% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 9.6% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Crocs is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Crocs.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Crocs analysts - going out to 2023, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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