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Why Crocs, Inc. Stock Jumped 33% in March

By Jeremy Bowman – Updated Apr 5, 2018 at 3:12PM

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Shares of the footwear maker popped on an analyst upgrade following a post-earnings sell-off. Here's what you need to know.

What happened

Shares of casual footwear maker Crocs, Inc. (CROX -4.11%) were stepping up last month as investors took advantage of a post-earnings sell-off in late February, seeing it as a buying opportunity. An analyst upgrade also seemed to help drive the stock higher. Shares rose 33% during March, according to data from S&P Global Market Intelligence, even though there was little other news out on the company best known for its trademark rubber clogs. 

As the chart below shows, the stock started off March strong and continued to move steadily higher, building on its earlier momentum.

CROX Chart

CROX data by YCharts

So what

Crocs shares actually dropped 13% on Feb. 28 after its fourth-quarter earnings report came out, as strong revenue growth was not enough to make up for weak bottom-line results. The company posted a $0.41 per-share loss during the seasonally weak fourth quarter, missing estimates at minus $0.08. However, investors seemed to smell a buying opportunity, as the company posted solid comparable fourth-quarter sales growth of 3.7% and said wholesale revenue increased 15.5%. 

The classic Crocs clog

Image source: Crocs.

The following day, the stock gained 5.6% with the help of an upgrade from Piper Jaffray. Analyst Erinn Murphy lifted her rating on the stock to overweight and raised her price target from $12 to $15. She argued that the post-earnings sell-off presented a buying opportunity and that the company had built a more profitable and sustainable business over the last two years. Investors seemed to agree -- they bid the stock higher and higher through the duration of March. 

Now what

Crocs shares have continued to rise through the beginning of April, blowing past Murphy's $15 price target, topping $17. Considering the company is only minimally profitable with earnings per share of $0.16 last year, Crocs will have to execute as Murphy has said it is doing. Still, if its top line continues to grow like it did in its most recent quarter, profits should steadily build as well.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool recommends Crocs. The Motley Fool has a disclosure policy.

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Crocs, Inc. Stock Quote
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