Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Crocs Are Surging Today

By Timothy Green - Dec 15, 2017 at 11:49AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The footwear company got an analyst upgrade, extending its months-long rally.

What happened

Shares of footwear company Crocs (CROX -1.48%) jumped on Friday after the company received an analyst upgrade. This move adds to a rally that began in May. Crocs stock was up about 14% at 12:15 p.m. EST, and is now up more than 100% since bottoming out earlier this year.

So what

An analyst at Stifel upgraded Crocs to "buy" on Friday morning. Stifel had previously downgraded the stock to "hold" in April 2016. This upgrade comes about a month after analysts at CL King & Associates downgraded the stock due to the valuation reflecting the company's growth prospects.

A Crocs clog.

Image source: Crocs.

Crocs' latest quarterly report beat analyst estimates for both revenue and earnings, but revenue declined for the fourth consecutive quarter. The company guided for flattish revenue for the fourth quarter, with a guidance range of $180 million to $190 million straddling last year's result of $187 million.

With the move higher on Friday, Crocs is now valued at about $900 million. The company hasn't turned a GAAP profit in the past three years, but a return to the double-digit operating margins of the past would more than justify the stock's price tag.

Now what

Crocs needs to return to revenue growth in 2018 and beyond, but it also needs to begin producing profits once again. The average analyst estimate calls for earnings per share (EPS) of $0.23 in 2018, putting the forward price-to-earnings ratio at a lofty 54. Clearly, Stifel expects the situation to improve far more than analysts do on average.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Crocs, Inc. Stock Quote
Crocs, Inc.
$47.95 (-1.48%) $0.72

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/02/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.