Crocs Bites Back At Inflation, Shares Soar

No Tears For Crocs Investors In Q3 Report

Crocs NASDAQ: CROX proves that systemic, global supply-chain disruptions and hot inflation are not impacting all companies the same. While many of the U.S. leading companies are showing the impact of disruptions on both the top and bottom line Crocs is not. Not only that, the company is raising guidance and assuring the market that all is well with the company. There are challenges to overcome, hurdles to cross, and issues to face but Crocs is taking care of business and delivering on its promises of growth. 

“During the third quarter, our business was impacted by Vietnamese factory closures and widespread disruption in the global supply chain. To minimize the impact of this disruption, we have taken swift action to shift production, improve factory throughput, leverage air freight, and strategically allocate units. Despite ongoing global supply challenges we remain confident in our ability to deliver upon our short- and long-term goals.”

Crocs, Inc Q3 Sets A High Bar For Everyone Else 

Crocs, Inc’s report was more than good, it was reassuring for a market bent on growth. While the company’s YOY growth slowed sequentially it came in above the Marketbeat.com consensus and is bolstered by favorable guidance. The company not only guided the coming quarter higher but the next year as well. In that light, the $625.9 is more than good, it’s downright amazing given the issues plaguing the market today. That’s good for a growth of 73% versus last year and last year’s revenue was up 15%. In regards to the consensus, the company beat the consensus by 265 basis points and it was a high bar to beat. 

Moving down to the earnings, the news is just as comfortable. The company reports 63.9% in gross margin which beat the consensus by 330 basis points. On the operating end, margin came in at a stout 32% and drove much stronger than expected earnings. The GAAP earnings of $2.42 beat the consensus by $0.56 while the adjusted earnings beat by $0.61 and are up 162% from last year. Wow. 

Looking forward, the company is expecting margin compression but less than previously forecasted. The new guidance assumes FY margin will run at 28% in 2021 and hold steady at 28% in 2022. This comes with an increase to revenue guidance that puts FY2021’s midpoint above the consensus vs in-line while the outlook for 2022 is much better. The company is expecting greater than 20% YOY growth next year or more than 500 basis points better than the average analysts estimate. 

Crocs Is Buying Its Shares, Maybe You Should Too 

Crocs recently announced an ASR or “accelerated share repurchase” plan worth $500 million or more than 5.6% of the market cap. The company revealed in its Q3 report those purchases were happening now, in total, this quarter and that it will still have $1 billion available under its allotted program. That’s quite a return for investors and shares are responding favorably to the news. 

Shares of Crocs jumped more than 10% on the news and are confirming support at the $140 level. This move is also supported by the indicators which suggest upward momentum is building with the current trading range. The top of the range is near $160 and could be reached easily within the next two to three trading days. A move above the $160 level would be very bullish and would likely lead the stock up another multiple or two at least. The Marketbeat.com consensus estimate is just over $156 which assumes fair value near current highs, the Marketbeat.com high price target of $215 assumes more than 43% upside is in store for this stock.