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Wall Street JournalCROX Stock Trades Above 200 & 50-Day SMA: How Should Investors Play?
Crocs, Inc. CROX shares have demonstrated momentum on the bourses. Closing at $139.43 yesterday, shares are trading above 200 and 50-day simple moving averages (“SMA”) of $130.48 and $137.02, respectively, signaling strong upward momentum and price stability.
The SMA is an essential tool in technical analysis that helps investors evaluate price trends by smoothing out short-term fluctuations. This approach provides a clearer perspective on a stock's long-term direction. This technical strength, coupled with the CROX stock's sustained momentum, indicates positive market sentiment and reflects investor confidence in its financial health and growth potential.
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CROX’s shares have risen 15.5% in the past six months, outpacing the industry’s growth of 3%. Crocs stock currently stands at 15.7%, below its 52-week high of $165.32 scaled on June 20.
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Despite the uptick in the stock price, Crocs is currently trading at a discount to its historical and industry benchmarks. CROX’s forward 12-month price-to-earnings (P/E) ratio stands at 10.13X, below the industry’s forward 12-month P/E ratio of 13.23X. This suggests that CROX stock might still be undervalued relative to its earnings potential.
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For investors, this presents an attractive opportunity to buy at a more favorable valuation. CROX currently has a Value Score of A, further validating its appeal.
Crocs’ Strategy for Success
CROX is focused on three main strategies to drive long-term growth. First, Crocs seeks to amplify the iconic status of its Crocs and HEYDUDE brands, boosting global awareness and deepening engagement with consumers. Second, the company is focused on capturing Tier 1 markets by strategically investing in talent, marketing, digital innovation and retail expansion. Lastly, CROX is broadening its customer base by diversifying the company’s product offerings and catering to a wider range of usage occasions. This ensures sustained relevance and growth across its brands.
Investments in product innovation and marketing for the Crocs brand are driving strong global consumer engagement. In the second quarter of fiscal 2024, growth was driven by the classic clog, highlighting CROX’s continued appeal to its customers worldwide.
In the HEYDUDE brand, Crocs is working to solidify its business in North America while positioning the Wendy and Wally lines as flagship franchises. In the recent quarter, CROX opened 13 new HEYDUDE outlet stores, bringing the total number of openings to 19 year to date. By the end of 2024, the company plans to open nearly 30 outlets.
In 2025, Crocs aims to optimize its stock-keeping unit count while refining channel segmentation and introducing innovations. For instance, the company launched the COMPF this quarter, enhancing the Wendy and Wally designs with added cushioning and height. After initial testing in direct-to-consumer channels, the product will be available in the wholesale channel in time for the back-to-school season.
Crocs is enhancing its marketing strategies to create memorable brand moments that increase awareness and build community. The company plans to introduce the brand thoughtfully while getting more shoes on feet. By focusing on its iconic products and emphasizing female youth culture, Crocs aims to strengthen brand connections. To support this, the company will boost its marketing investment in the second half of fiscal 2024 to generate excitement for HEYDUDE.
For quite some time, Crocs has been witnessing a decline in freight costs, contributing to gross margins. Also, favorable product costs, with price increases internationally and lower discounting have been acting as tailwinds.
What to Expect From Crocs in Upcoming Earnings?
For third-quarter fiscal 2024, the company expects the Crocs brand’s revenues to grow 3-5% year over year.
Crocs anticipates 3-5% year-over-year revenue growth for 2024 in constant currency. Revenues for the Crocs brand are expected to increase 7-9%, while the HEYDUDE brand revenues are predicted to decline 8-10%. The company expects adjusted earnings of 2024 in the range of $12.45-$12.90 per share compared with prior guidance of $12.25-$12.73.
The company’s forecast boosts confidence in Crocs' capacity to maintain earnings growth, underscoring its dedication to strategic investments and expanding market presence.
Estimate Revision Favoring CROX
Reflecting the positive sentiment around Crocs, the Zacks Consensus Estimate for earnings per share has seen upward revisions. In the past 30 days, analysts have increased their estimates for the current and next fiscal years by 3 cents to $12.88 and by 1 cent to $14.00 per share, respectively. These estimates indicate expected year-over-year growth rates of 7.1% and 8.7%, respectively.
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Assessing Crocs Stock
The company has been benefiting from solid consumer demand for the Crocs brand, bolstered by effective pricing strategies and lower freight costs. With the stock trading above the 200 and 50-day SMA, Crocs’ strong financial health and strategic positioning demonstrate its resilience and potential for continued growth in the footwear market. CROX’s Zacks Rank #2 (Buy) suggests that current stakeholders may consider expanding their investment.
Other Stocks to Consider
We have highlighted three other top-ranked stocks, namely G-III Apparel Group, Ltd. GIII, Revolve Group, Inc. RVLV and Gildan Activewear Inc. GIL.
G-III Apparel designs, sources and markets women's and men's apparel in the United States and internationally. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
GIII has a trailing four-quarter earnings surprise of 118.2%, on average. The Zacks Consensus Estimate for G-III Apparel’s current quarter’s sales indicate a growth of 3.3% from the year-ago reported number.
Revolve Group operates as an online fashion retailer for millennial and Generation Z consumers in the United States and internationally. RVLV currently flaunts a Zacks Rank #1. RVLV has a trailing four-quarter earnings surprise of 63.1%, on average.
The Zacks Consensus Estimate for Revolve Group’s current financial year’s sales and earnings implies growth of 2.2% and 44.7%, respectively, from the year-ago reported numbers.
Gildan Activewear manufactures and sells various apparel products in the United States, North America, Europe, the Asia-Pacific and Latin America. GIL currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for Gildan Activewear’s current financial year’s sales and earnings suggests a rise of 1.4% and 14%, respectively, from the year-earlier reported figures. GIL has a trailing four-quarter earnings surprise of around 5.5%, on average.
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Crocs, Inc. (CROX): Free Stock Analysis Report
G-III Apparel Group, LTD. (GIII): Free Stock Analysis Report
Gildan Activewear, Inc. (GIL): Free Stock Analysis Report
Revolve Group, Inc. (RVLV): Free Stock Analysis Report