Crocs Shares Jump Over 12% After Impressive Q4 Results
Shares of Crocs, the popular footwear maker, surged more than 12% on Thursday, reaching $121.63, following the release of its fourth-quarter financial results. The company's top- and bottom-line figures exceeded analysts' expectations and reconfirmed its full-year forecast for adjusted earnings per share, which projected a range of $12.05 to $12.50. This is notably higher than the consensus estimate of $11.90 per share.
Baird analyst Jonathan Komp described Crocs' report as a "very solid finish to a strong year" and expressed continued confidence in the stock. Consequently, he raised his price target from $155 to $160. Komp rates Crocs' stock as Outperform. Additionally, Raymond James analyst Rick Patel increased his price target to $145, up from $120, emphasizing the company's compelling drivers for durable growth, such as its growing international and direct-to-consumer businesses, as well as ongoing innovation. Patel rates the stock as Strong Buy. FactSet data indicates that nearly two-thirds of the analysts covering Crocs are optimistic about its future prospects. Furthermore, consensus earnings estimates for the full year rose by nearly 5% after the report.
Crocs experienced a surge in sales during the pandemic, as consumers gravitated towards comfortable footwear options. This trend has continued, resulting in a substantial increase of over 180% in the company's shares, outperforming the S&P 500's return. Since the start of the year, Crocs' stock has risen by 30%.
The positive earnings season for footwear brands continued, with Deckers Outdoor also reporting a double-digit gain in its fiscal third-quarter results. Similarly, its shares have risen by around 160% since then. However, the success of Crocs and Deckers stands in contrast to some other footwear brands. For instance, Skechers experienced a decline following its earnings report in early February, and Nike stock had a lackluster performance, suffering its worst drop in almost 15 months.
Despite the post-earnings surge, Crocs' stock remains attractive, trading at less than 10 times forward earnings, which is significantly below its five-year average of 14.3 times. Furthermore, the company's outlook for 2024 indicates potential for upside surprises. Crocs' continued efforts to reduce debt and actively repurchase its own shares contribute to its appeal. The company's growing free-cash-flow profile and improving margins further support its positive outlook.
Analyst comment
Positive news. The market is expected to continue to perform well as Crocs’ strong fourth-quarter results exceeded expectations, leading to increased price targets and positive ratings from analysts. The company’s sales have soared during the pandemic, and its stock has significantly outperformed the market. With attractive valuation and positive growth drivers, Crocs is well-positioned for future success.
