Crocs: 3 Reasons Why I Am Buying The Dip

(11min)

Summary

  • Crocs reported their Q2 FY24 earnings where revenue and Adjusted Operating income grew 4.8% and 0.4% respectively, beating estimates.
  • The Crocs brand grew 11.2% YoY driven by higher volume sold and ASPs from robust international expansion in China and Europe along with strategic partnerships to drive customer engagement.
  • Although HEYDUDE brand is struggling with declining volumes, its ASPs and gross margins improved as the management takes a more focused approach to revive its strength.
  • With the company raising its Adjusted operating margin to over 25%, I believe that the stock is attractively priced from a risk-reward perspective, reiterating my “buy” rating.

Little girl playing with puddles and splashing water in a park in summer after rain

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Introduction & Investment Thesis

I last covered Crocs (NASDAQ:CROX) in May, where I reiterated my “buy” rating on the stock. My thesis was predicated on my belief that the headwinds from its HEYDUDE are likely priced in

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Amrita runs a boutique family office fund in beautiful Vancouver, where she leads the investment strategy for the family fund. The fund's objective is to invest capital in sustainable, growth-driven companies that maximize shareholder equity by meeting their growth-oriented goals. In addition, she also started her own award-winning newsletter, The Pragmatic Optimist which focuses on portfolio strategy, valuation, and macroeconomics in concert with her husband Uttam Dey who is also a contributor on Seeking Alpha. Prior to cofounding her fund, Amrita worked for 5 years in high-growth supply-chain start-ups in downtown San Francisco, where she led strategy. During her time in the Bay Area, she also worked with venture capital firms and start-ups, where her efforts led her to grow the user acquisition business. During this time, she was introduced to investment portfolios and was able to maximize returns for clients during the pandemic. The cornerstone of Amritas work rests on democratizing financial literacy for everyone and breaking down financial jargon and complex macroeconomic concepts into formats that are easily digestible but more empowering than the typical investment thesis. Her newsletter has been featured as the Top Newsletter in Finance on popular newsletter platforms and she aims to bring her ideas to Seeking Alpha as well.

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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