High flyer Crocs Inc. (NASDAQ: CROX) is set to report after the close today and will host a conference call and web cast for all investors at 4:30pm Eastern Time. The stock has been running up a bit in front of the release, gaining about $5 to $72. What to expect?
The company crushed the June numbers by a wide margin. It beat the top line by $40 million at $224 million of revenues and the bottom line was $0.58 versus expectations of $0.42. The company made a huge statement as to its validity with these June results. Consensus for the September quarter (endorsed by the company -- a first) is for revenues of $258 million and earnings per share of $0.63. The fact that Crocs management endorsed these numbers indicates they must see a powerful quarter developing. Both top and bottom line numbers represent a roughly 10% increase from quarter-to-quarter.
I have recently moved my price target to $100 within the next 12 months for Crocs. It is a misunderstood story and the short-sellers who have dismissed this story as a fad have gotten destroyed. The stock has increased 4-fold this year so far. I have written that I believe Crocs is a real phenomenon -- fads do not do $1 billion in revenues, and fads do not offer 65 different products.
The key to the earnings call will first and foremost be the actual numbers! Crocs has to be careful not to get too involved in the beat-the-numbers-raise-the-bar game. That strategy will elevate the share value pretty quickly, but eventually it will not be able to keep up the pace. Investors like a penny or two beat, but get spoiled when a company keeps beating the earnings by 10 cents per quarter. Spoiled investors react negatively the first time a company has the audacity to report an in-line number.
Crocs has endorsed a $2.56 earning per share number for calendar 2008. For some perspective, three quarters ago that 2008 number was sitting at $1.80. The growth of the company has been stunning and the market cap now sits at $5.8 billion. Crocs, through excellent execution, could see that market cap go to $20 billion over the next four or five years. The plethora of products, available and in the pipeline, is huge and creative.
The phenomenon known as Crocs should see another arrow in its quiver after today's earnings release and call. The big news will be the strength of international revenues and the new men's and children's line of clothing. Stay tuned!
Georges Yared is the CIO of Yared Investment Research and the author of Baby Boomer Investing...Where do we go from here?
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Reader Comments (Page 1 of 1)
11-01-2007 @ 1:17PM
sina said...
I just don't get it. Crocs are so damned ugly. How could they be anything but a fad? What are we as a society if we don't learn from history? I submit that we are nothing more than a fake erection.
On the other hand we have those shoes with wheels on the bottom. For some reason they've been relegated to a children's toy, and it makes me sad. I want to roll down the street, a gelato in my hand and intense life-affirming and synergistic feelings cartwheeling through my hormonal system.
Where do I sign up to invest in roller-shoes?
10-31-2007 @ 6:28PM
Leah said...
If you have ever had a heel spur so bad you can barely walk or spend all day on your feet in toe crushing shoes you would know why they are catching on. They did for me what 6 consecutive injections of cortisone could not.
10-31-2007 @ 5:19PM
joe said...
So what happened today smart guy?
10-31-2007 @ 6:18PM
Mike said...
My monitor shows me that good ole Crocs got on the wrong end of the big trick-or-treat, plummeting an eye watering $16.19 in after hours, now at $55.90. Buddy, talk about major egg on your face on this one. Yowza!
10-31-2007 @ 6:29PM
George Linder said...
What a crock of sh*t.
Very bad call Georges.
Hope you didn't have too many call options out there.
Investing 101, never play earnings. Crapshoot.
11-01-2007 @ 7:38AM
Larry Johnston said...
Classic PUMP and Dump...No real reseach firm misses this bad!!!
I hope you made a killing on the short side, otherwise you are a real moron...WOW!!!
11-01-2007 @ 9:24AM
Jim DiMoney said...
Good call Yared, $100 per share, so this is an $8B company? Egg on your face, looks like you're just playing off as a real "analyst" but are just another momentum rider. Good work dumb@ss. How can any financial advisor ever recommend a stock trading at those types of P/S, P/E multiples for a rubber fad shoe co?
11-01-2007 @ 10:20AM
MARY BETH said...
THE ANSWER IS TO WEAR THEM-ASK ANYONE WITH FOOT PROBLEMS AND THEY WILL TELL YOU THERE HAS NEVER BEEN ANYTHING LIKE THEM HARDLY A FAD!
11-01-2007 @ 2:14PM
Ed Kennedy said...
Hey guys and dolls.I,m a small time investor, but I about dropped my my crox and skiffies when Ichecked mine at 4:oo pm and saw it haddropped 24% and then even more this morning. I still feel it is a good product.I gave a health problemwhere I get major relief from wearing the crox.I have lost money bill keep the stock for a wear and continue to buy and wear them.I still wonder why somw of the insiders sold some of their options.Maybe they knew something I wasn't aware of
11-01-2007 @ 10:43PM
Stock Bubbles SUCK said...
What do you expect? This is the same guy that pumped WM in March when it was $40 saying it was cheap and credit problems were overblown.
George is just another know-nothing shill........
His precious pick AAPL is next out to the woodshed!
SELL!!!!!!
11-02-2007 @ 1:37AM
Jonathan Coke said...
"Spoiled investors react negatively the first time a company has the audacity to report an in-line number" - Well said. It's still a good investment, but it sucks if you miss the signs of a run up. Blue light special in shoes? Buy two pairs get one pair free?
11-01-2007 @ 9:07PM
boris said...
the shares are down $28 to the $47s. i sold my shares around $64+ and would like to buy them back for $15+ a share less. i listened to the conference call and see how $30-$35 million in missed "seasonal " 3Q SUmmer sales from EURO-JAPO distribution bottle neck may have hindered the bottom line by 15 cents a share in the just reported quarter. it seems that most of the growth factors are still intact. competitive landscape hasnt changed much. maybe this is a blip in the road for a stable growth franchise. Big upside surprise the gross margin rich international sales were booming, the were more then 50% of sales and might have been 65% of sales, this is simply incredible. Almost there: 2/3 of CROCS business is international. 75 styles and atleast a dozen are hot sellers, ebay prices are brand friendly, and the company accounces a share buyback today.
11-02-2007 @ 10:31AM
Ed Kennedy said...
I still think many wearers of the shoes will continue to wear and buy them.Read the posts from people with foot problems praising them. Read posts from Doctors and nurses that love them.Supply not meeting the demand could have added to the lack of sales.You cannot sell what you don't have in stock. I lost money on my stocks ,but I think the foreign markets will make up for that. I hope so.I'm not selling mine yet.
11-04-2007 @ 12:50AM
mlarkin said...
Been waiting and waiting for some explanation as to why you were so catastrophically wrong on this stock. Fess up!
11-05-2007 @ 11:09AM
Gumby said...
I am still wearin my beach Crocs but I sold Crocs stock. I am waiting for it to hit a new bottom before jumping back in. Crocs is not a buy and hold General Electric type of stock. It is not for the faintest of hearts! Remembr, you are trading stock with plain ol' unscruplous money changers in Wall Street.