Crocs Shares Popped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Does Crocs (Nasdaq: CROX  ) make Air Jordans? I think I know the answer, but I've got to ask anyway -- because this morning, I'm watching in wonderment as Crocs shares jump 15% and hang ten.

So what: Crocs reported Q2 earnings yesterday evening, and what an quarter it was. Sales surged 30%, while profits sprinted ahead 72% in comparison to Q2 2010.

Now what: And Crocs isn't done yet. Management tells us to expect another 30% jump in sales during this current quarter. Sales should be in the $280 million range, with profits hitting $0.40 per share. Management says Crocs has its "most diverse product line ever," and consumers seem to be snapping up Crocs by the cart-load.

As for whether you should buy it, though ... well, I admit the stock looks kind of pricey at 25 times trailing earnings. On the other hand, back-to-back 30% sales-gain quarters could put the lie to analyst predictions of 12.5% long-term earnings growth at Crocs. If this company keeps this up much longer, Wall Street's just going to have to raise its expectations -- with analyst upgrades following, and in all likelihood, further price pops for Crocs.

Bears versus bulls -- who will carry the day? Add Crocs to your Watchlist and find out.

For the time being, Fool contributor Rich Smith does not either own (or short) shares of Crocs. The Motley Fool has a disclosure policy. Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.


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