Will CROX Maintain its Earnings Winning Streak?

CROX will release its earnings results on Aug. 4

Jul 27, 2022 at 12:40 PM
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Crocs, Inc. (NASDAQ:CROX) is gearing up for its second-quarter earnings release, due out before the open on Thursday, Aug. 4. CROX has outperformed earnings expectations on its  four most recent earnings reports. Most recently, the footwear company reported earnings of $2.05 per share, beating the Street's expectations by a margin of $0.50. Wall Street analysts anticipate that Crocs will report increased earnings of $2.68 per share in the upcoming earnings report.

Despite these earnings beats, CROX fell lower the day after its last two reports. Looking back two years, however, the stock has logged a positive post-earnings return during five of these eight instances, averaging a 7.4% swing, regardless of direction. This time around, options traders are pricing in a 15% next-day move. 

The equity was last seen up 2.6% at $59.84, though it's carrying a 53.4% year-to-date deficit. CROX does look to have found some support at its 60-day moving average -- a former rejection level the stock broke above earlier this month. Moreover, Crocs stock trades at an extremely low forward price-earnings ratio of 6.40 and a price-sales ratio of 1.56.

The casual footwear company has produced strong top- and bottom-line growth over the past few years and is expected to continue growing at a high rate. For fiscal 2021, Crocs reported a 67.6% increase in revenues and a 132% increase in net income. CROX is also estimated to generate 50.6% revenue growth and 25.2% earnings growth for fiscal 2022. In addition, the business is expected to increase its revenues and earnings 13.3% and 8.9%, respectively, for fiscal 2023. This all makes CROX’s valuation appear very attractive for both growth and value investors. Overall, the biggest issue with the company’s fundamentals is its balance sheet which holds just $171.97 million in cash and $3.11 billion in total debt. Nonetheless, Crocs stock remains undervalued and maintains a reward potential that justifies the risk.

 

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