Crocs Inc: All purpose shoes for comfort and fashion

There is an outfit in Niwot, Colorado that designed a line of shoes originally intended for boating and outdoor uses. They caught on so well, though, that you see them just about everywhere now.

Crocs Inc. (NASDAQ: CROX) designs, manufactures and markets footwear for men, women, and children. The company's shoes are soft, lightweight, nonmarking, and slip-resistant. The firm also manufactures and sells a line of Crocs-branded apparel and accessory items. Products are distributed through retailers, including Dillard's (NYSE: DDS) and Nordstrom (NYSE: JWN). Nike (NYSE: NKE) is a major competitor.

The firm pleased investors last week, when it announced Q1 EPS of 61 cents and revenues of $142 million. Analysts had been expecting 49 cents and $113.9 million. Management also guided Q2 EPS to 80-85 cents (63 cent consensus), Q2 revenues to $180-$190 million ($135.61M consensus), FY07 EPS to $2.90-$2.95 ($1.42 consensus) and FY07 revenues to $670-$680 million ($540.11M consensus).

Further, Crocs announced a 2-for-1 stock split. Shares will trade split-adjusted, on June 15th. Wedbush Morgan subsequently upgraded the issue to "strong buy" and Nollenberger Capital reiterated its "buy." CROX shares popped on the news and have since been defining a bullish "pennant" consolidation pattern. Prices frequently exit pennants moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.

Altogether, brokers now recommend the shares with three "strong buys," two "buys" and two "holds." Analysts expect a 25% average annual growth rate, through the next five years. The CROX PEG ratio (1.42), Sales Growth rate (216.65%), EPS Growth rate (258.82%), Operating Margin (27.16%), Net Profit Margin (18.35%), Return on Assets (33.09%), Return on Investment (44.11%) and Return on Equity (44.87%) compare favorably with industry, sector and S&P 500 averages.

Institutional investors hold about 95% of the outstanding shares. The stock is one of those used to calculate the S&P 600 Small Cap Index. Over the past 52 weeks, it has traded between $21.56 and $72.25. A stop-loss of $62 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.