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Crocs: Why This Turnaround Story Has Incredible Upside

Mar. 23, 2023 8:49 PM ETCrocs, Inc. (CROX)20 Comments


  • CROX has undergone a remarkable transformation since 2014, from the leadership of CEO Andrew Rees.
  • With tremendous revenue growth and high EBITDA margins rivaling software companies, CROX has the potential to return incredible upside to investors.
  • I rate CROX a Strong Buy.

Colored bright slippers for women and children flip flops on a blue background. Place for text


Investment Thesis

Crocs, Inc. (NASDAQ:CROX) is a Colorado-based global lifestyle brand that designs, produces, and distributes innovative footwear, accessories, and apparel. Its mission is to provide everyone with comfortable, lightweight, and versatile footwear.

This once uninspired, unloved, and unprofitable company

This article was written by

I am a seasoned investor who personifies the realistic investor. I pride myself on taking a pragmatic approach to equity analysis. By using realistic forecasting based on prior financial data, we are able to make informed investment decisions, rather than relying on overhyped, hypothetical outlooks.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of CROX either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (20)

I have read articles recommending a buy on DECK . Which trades at about double the P/E ratio 22x versus CROC 11 x . Both companies have two string billion dollar brands . With the smaller, newer brand having explosive growth these past three years . HOKA for DECK and Hey Dudes for CROCS . CROX has a 26 % net profit to sale ratio while DECK is half that . My question is why does CROX sell for half the P/E ratio while having better five year growth and twice the level of profitability? Something is out of wack . I don’t think DECK is insanely expensive but I believe that CROX is insanely cheap . If it continues it’s 20 % growth with the same level of profitability is also should sell at 22 x P/R or $240 a share within one or two years . Period .
cruiser88 profile picture
@Gene nadler Gene, you are correct. You aren't missing anything. The market is throwing you an easy pitch belt high right over the plate. Probably Crocs was lumped in with the covid bubble stocks, then they bought heydude which most investors had never even heard of, and paid what was thought to be way too much. Even after a recovery of >100% from last years low, it is priced low. There seems to be a push and pull recently of investors who think it has outrun itself and those who believe it is just getting started as there is high fluctuations in the daily price. I added to my position heavily last year and now it is >25% of my active portfolio, so I am slowly trimming, but I know it still has legs and it will remain my top position for the near future.
2tired2talk profile picture
@Gene nadler

Your description actually is missing one thing….. Debt.

DECK has $1bb cash and no debt. CROX has $2bb+ in net debt.

DECK is a fabulous company that has a conservative management that buys back stock every quarter.

CROX has incredible profit margins and a new product line that is growing like crazy. I bought the stock after buying a pair of “dude’s”. I thought, “They’re going to sell millions of these shoes!”

I own CROX, but DECK still deserves the higher multiple.
Higher yes but CROX should be 15 x PE not 11 . That a move up of about 40 % without earnings exploding. There while DECK May deserve 20 x PE CROX more deserves 15 x and seems to me to have more upside potential. The last year had been great to both sticks in a contuing bear market . CROX has outperformed Deck and I believe will continue to do so . Debt is a liability but if used well becomes an asset as the case of CROX displayed .
Michele0618 profile picture
Crocs has been growing its sales steadily with its online business on the Internet. The Amazon Influencer Program has made its sales of Crocs Unisex-Adult Classic Clogs amazing
The Realistic Investor profile picture
@Michele0618 Excellent point. I consistently see CROX's clogs and HeyDude's shoes in the top 100 whenever I go on Amazon. Definitely good things to see.

Thank you for reading!
"Crocs’ geographic presence is diversified, with operations in North America, Europe, Asia Pacific, and the Middle East." - In fact, they are very popular with the locals down here in Panama as well - with a number of Croc Stores in/around the city.
The Realistic Investor profile picture
@xident I took this information from CROX's 10-K but yes, I'm not surprised they're prevalent in Central America. More information only adds to the bull thesis.

Thank you so much for reading!
cruiser88 profile picture
Another reason I'm bullish is because even in the event of a recession, people will still buy shoes. In fact, I can see people turning to crocs and heydude as a cheaper alternative to other sneakers.
The Realistic Investor profile picture
@Btimmer Yes, that's an excellent point. Their cheaper price point makes them more resilient in the face of a recession. Even more reasons to add to the bull thesis.

Thank you for reading!
Michele0618 profile picture
@Btimmer Clothing is also a fast consumable. But a good apparel company needs not only good ideas but also good leaders. There is no doubt that Crocs is doing a good job
The Realistic Investor profile picture
@Michele0618 Absolutely agree. Andrew Rees is a phenomenal leader who has been transparent with where the company is and will go.

Thank you for reading!
I’m a CROX convert, always thought they looked weird but tried a pair and loved them. My problem with the growth prospects is their durability…once crocs stops reaching new markets, where do the numbers come from? I go through pairs of shoes, but I don’t see myself buying more crocs anytime soon.
The Realistic Investor profile picture
@PackStack Management has stated on multiple presentations that they believe they've only addressed a small percentage of their TAM. With the acquisition of HeyDude as well as their focus on their sandals segment, there is still much growth to come.

Thank you so much for reading PackStack!
@PackStack over the next decade the HeyDude acquisition solves this problem. People can’t get enough of them and they have a seemingly endless amount of styles. People buy them like collectibles.
The Realistic Investor profile picture
@JustAverage I agree! Their TAM has expanded greatly because of the acquisition.
I see HEYDUDE shoes everywhere near the beach and in summer.

Bought a couple pairs myself last year and love them.
A brilliant buy for CROX
The Realistic Investor profile picture
@Harry Sack I agree Harry, I've recently bought a couple loafers myself and I have to admit I love them!

HeyDude is an amazing purchase and will pay off tenfold for Crocs in the future. Thank you so much for reading!
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