Crocs (CROX) Stock Is a Buy Due to Strong Growth Prospects

On April 27, Crocs (CROX) stock rose about 15 percent. The stock rose significantly after the company posted its first-quarter earnings results and raised its 2021 sales outlook. What’s the forecast for CROX stock in 2021? Should you buy or sell the stock?

Crocs is a footwear manufacturer with headquarters in Niwot, Colo. The company’s CEO Andrew Rees said that the demand for its products is “stronger than ever” globally. Celebrities like Justin Bieber have also helped boost the company’s fashion status.

In the first quarter, Crocs reported an adjusted EPS of $1.49 compared to $0.22 in the first quarter of 2020. The adjusted EPS beat analysts’ average estimate of $0.89. Crocs generated sales of $460.1 million in the first quarter, which was 63.6 percent more than it did in the first quarter of 2020. The company also beat analysts’ average sales estimate of $415 million. Digital sales grew by 75.3 percent and accounted for about 32.3 percent of the overall sales.

Crocs stock rose 15.3 percent on April 27 and was up in pre-market trading on April 28. The stock has gained 56.1 percent YTD and 273.8 percent over the last year.

According to Market Beat, analysts' average target price is $99.67 for CROX stock, which is 2 percent above its current price. Among the 11 analysts tracking CROX, eight recommend a buy and three recommend a hold. None of the analysts recommend a sell. Their highest target price of $140 is 43.1 percent above the stock's current price, while their lowest target of $53 is 45.8 percent below.

After Crocs’ first-quarter earnings report, several analysts boosted their target price. Piper Sandler raised its target price from $104 to $140, while Robert W. Baird raised it from $100 to $135. Monness Crespi also boosted its target price from $91 to $125.

Crocs stock looks like a good investment based on its strong growth outlook. For the second quarter, the company expects sales growth in the range of 60 percent–70 percent YoY compared to analysts’ expectation of 39.2 percent. For 2021, the company expects sales to grow by 40 percent–50 percent YoY compared to analysts’ expectation of 25 percent. The company is witnessing high demand for its products as consumers seek comfort at home.

While Crocs is witnessing solid and continued momentum in the U.S., it sees the biggest long-term growth potential in Asia, which it thinks is the second-largest footwear market globally. The company is also planning to introduce more sandals. In the first quarter, sandals sales grew by 17 percent YoY.

During the first-quarter earnings conference call, Rees said, “Looking forward, we'll remain focused on our strategically important accounts comprised of leading e-tailers, sporting goods and family footwear and specialty footwear retailers.” 

Crocs trades at an NTM PE multiple of 18.3x, which looks attractively priced compared to other consumer stocks. Nike and Deckers Outdoor are trading at NTM PE multiples of 36.7x and 24.0x, respectively.