Have you been watching Crocs (CROX 0.87%) these days? The stock hit all-time highs on Wednesday, fueled by another blowout quarterly report earlier in the week. If this all seems wild to you just because your last pair of the company's foam clogs has been collecting dust in a high shelf of your closet for more than a decade, you may want to grab a step stool and try them on for size again.

Crocs are hot again. Don't laugh. It's true. Did you see the Oscars on Sunday night? Musical director Questlove was the talk of the red carpet with his shiny gold Crocs. Whether it's the pandemic that has emphasized comfort over fashion or it's just time to admit that some fads never truly die, the renaissance is real here. Crocs has posted three consecutive quarters of record revenue, and the scary thing is that it's just getting started. 

A single Crocs shoe in bright yellow.

Image source: Crocs.

A hole in one

It's been 20 years since Crocs was initially introduced as a boating shoe. The patented closed-cell resin antimicrobial footwear seemed to check off all of the boxes that boating enthusiasts need in shoes that can resist a fishing expedition's worst elements.

It didn't take long for nurses, teachers, security guards, and anyone who spent a lot of time on their feet to warm up to comfortable shoes. Kids also took to bright-colored Crocs, decking them out with snap-on accessory charms called Jibbitz for a little extra personalization. 

The craze came. The craze went. Sales started to pick up abroad to give Crocs a new lease on life, but that wave also eventually crashed. New management took over. Andrew Rees -- a retail industry consultant and former VP of strategic planning and retail operations for Reebok -- came in as president in 2014. He also became CEO in 2017, and that's when the turnaround started to happen. 

Revenue rose 6% in 2018 after three years of small declines. Crocs would follow that up with 13% growth in 2019 and 2020, but last year's performance was a tale of two halves. Revenue was negative through the first half of the year as the pandemic gripped consumers, roaring back to life with a 16% increase for the third quarter and a head-turning 57% surge during the seasonally potent holiday quarter. 

Crocs wasn't done surprising the market. In late February it was forecasting a 40% to 50% jump in revenue for the first quarter, on the way to a 20% to 25% increase for all of 2021. The quarter was nearly two-thirds over, so it seemed as if year-over-year growth would slow sequentially from the stunning 57% burst in the fourth quarter.

On Tuesday Crocs came through with 64% top-line growth for the quarter. It also jacked up its full-year guidance, now targeting 40% to 50% revenue growth in 2021. It's not just the top line getting all of the attention here. Crocs now sees 22% to 24% in adjusted operating margin for the year, up from the 18% to 19% it was modeling just two months ago. 

Beating the market

Wall Street doesn't have a clue. Crocs has beaten analyst profit targets by 34%, 36%, and now 67% in each of the last three record-setting quarters. The stock is nearly a 12-bagger since bottoming out in the single digits in March of last year, but it's only fetching 17 times trailing earnings. Put another way, 13 months ago it was trading for less than double what it would go on to earn in the year ahead. 

The fear is naturally going to be that we've seen Crocs cool off after getting hot before. History repeats. However, the growth trajectory is pretty clear through at least the next few quarters. Crocs should top $2 billion in sales this year. Margins are expanding. It has embraced e-commerce with digital sales now accounting for nearly a third of the business. Crocs are taking off globally, and while its headiest growth is taking place on its home turf of the Americas we're seeing double-digit growth across the rest of the planet. 

Everything -- including the share price -- is heading in the right direction. Revenue growth is clearly accelerating, and so is the pace of the bottom-line beats. Gross margin is expanding for the sixth consecutive year. There comes a point where a fad becomes a trend and then that trend becomes a revolution. Dust off those old Crocs. There's going to be a lot of walking in this revolution.