Current Developments Surrounding Crocs' Share Prices
Crocs' stock has been on a roll recently, ballooning by 19% over the past week, reaching an impressive $107 (as of Feb. 18). This meteoric rise trumps the S&P 500's modest 1% increase during the same period. The primary reason for Crocs' shoutout in the stock market is its smashing Q4 results, surpassing predictions and attributing this success to its booming international sales and digital expansion.
Revenue soared to an impressive $990 million, breezing past the estimated $961 million, marking a 3% year-over-year (y-o-y) increase. Crocs' net earnings per share (EPS) also dazzled analysts, swinging in at $2.52 - a 2% y-o-y decrease, but surprisingly, this number still managed to exceed forecasts.
Looking ahead, Crocs anticipates a slight decrease in Q1 2025 revenues, around 3.5% y-o-y. Adjusted diluted EPS for the first quarter is projected to range between $2.38 and $2.52. Crocs is also forecasting mid-single-digit revenue growth for the Crocs Brand in 2025, while strategically addressing an expected 7-9% decline in the HeyDude segment.
In the face of currency and tariff fluctuations, Crocs plans to maintain an adjusted operating margin of 24%. Projected adjusted EPS for 2025 ranges between $12.70 and $13.15. Investors should pay heed to Crocs' digital transformation, international expansion, and fiscal responsibility in managing SG&A expenses as crucial factors that will bolster their growth trajectory in 2025.
In terms of volatility, Crocs' stock has demonstrated a level of instability far surpassing the S&P 500. Crocs' annual returns span a rollercoaster range of 105% in 2021, plunging to -15% in 2022, faltering again at -14% in 2023, but then soaring to 17% in 2024. Conversely, the Trefis High Quality Portfolio has remained remarkably stable, consistently outperforming the market with a return rate of over 91% since its inception.
Crocs' recent financial performance paints a picture that is somewhat complicated. The Crocs Brand has unequivocally thrived, with Q4 revenues climbing 4% y-o-y. On the flip side, however, the HeyDude Brand, which Crocs acquired in 2022, has grappled with challenges, remaining flat in Q4. Investors have grown restless with the HeyDude brand – particularly given its hefty $2.5 billion acquisition cost – but Crocs' strong reliance on its core brand, which accounts for 80% of its business, should be considered a positive factor.
In Q4 2024, Crocs recorded consolidated revenues of $4.1 billion, a modest 3.5% y-o-y increase from 2023. Adjusted EPS skyrocketed 9.5% to $13.17, while diluted EPS surged 24% to $15.88. Crocs Brand revenue escalated 9% y-o-y, fueled by a 10% surge in direct-to-consumer sales, an 8% boost in wholesale revenue. Conversely, HeyDude revenue dwindled 13% y-o-y, with direct-to-consumer sales plummeting 4% and wholesale revenue slumping 20%.
Crocs' Q4 adjusted operating margin roared past the 20% mark, outperforming average industry rates, although the margin tumbled from last year's peak of 24%. Compared to Nike, Crocs' stock trades at a forward P/E ratio of just 8x this year's predicted earnings, potentially indicating undervaluation.
- Despite the impressive revenue growth of $990 million in Q4, Crocs' net earnings per share (EPS) saw a 2% decrease, leading to some investor uncertainty about the Crocs' Crox revenue for 2024.
- Analysts were surprised by the Crocs' earnings in Q4, with the Crocs brand performing exceptionally well, but the HeyDude segment, which contributed heavily after its acquisition, showing underwhelming progress.
- In anticipation of the Q1 2025 earnings, investors are closely watching the Crocs' plans to maintain growth in the Crocs Brand while strategically addressing the expected decline in the HeyDude segment, whose Crocs revenue has been underperforming.
- The Crocs' stock has shown volatility in its annual returns, with a 17% surge in 2024, but some investors remain cautious due to the 2024 Q4 earnings, which showed a 3.5% increase in total revenue and significant fluctuations in the Crocs and HeyDude Crocs segments.
