Despite growing demand for Crocs' (CROX 1.47%) footwear, the stock has cratered since hitting an all-time high in late 2021. Obviously, worries over consumer spending in this inflationary environment have weighed on all retail stocks, but Crocs' latest sales figures make its single-digit price-to-earnings (P/E) multiple appear very tempting. 

The colorful footwear continued to experience strong demand last quarter, with revenue growing at double-digit rates year over year. While Wall Street's favorite profit metric -- earnings per share (EPS) -- missed analysts' estimates, Crocs seems to be one of those companies that the market consistently underestimates. Is it time to buy?

Crocs still rocking after 20 years

Stocks have gotten hammered for missing estimates lately, but not Crocs. The reason likely has to do with a very low valuation that seems to already price in bad news. Indeed, Crocs' adjusted EPS growth of 20% last quarter looks almost too good for a stock trading at a trailing P/E of 9. 

On top of concerns over slowing consumer spending, which has already led to lower sales of electronics and PCs, there's also concerns about how sustainable Crocs' momentum is over the long term. Fashion stocks generally trade at lower valuations relative to more predictable industries, but sometimes certain brands find a successful formula that leads to steady sales growth that the market doesn't expect.

Crocs seems to be one of the successful ones. It's been around since 2002 when the first style was introduced. Around 2015, the company's sales decelerated from overexpansion with too many product lines. After closing unprofitable stores and refocusing on the classic clog style, sales took off again. 

CROX Revenue (TTM) Chart

CROX Revenue (TTM) data by YCharts

Revenue has nearly tripled over the past five years, reaching $2.8 billion. Part of that jump was due to the acquisition of the Heydude brand in 2021, but demand is still strong for the core Crocs brand, with revenue growing 20% year over year on a constant-currency basis last quarter. 

It's a good sign that the company's fastest rate of revenue growth has come from international markets. Global expansion is one reason why management believes it can reach $5 billion in annual revenue by 2026, or nearly double trailing-12-month revenue. 

Crocs is a good business with growth opportunities. It takes a simple product made from a single raw material -- a proprietary formula of elastomer resin -- and uses that material across the majority of its footwear line. This leads to high returns on invested capital and shareholder returns, since the trademarked Croslite material can't be easily replicated. There are fake Crocs on the market, but recent sales prove there's nothing like the real thing.

While Wall Street worries about fashion risk, investors should take comfort that the Crocs brand ranked in the top five of Piper Sandler's Fall Taking Stock with Teens Survey, up one spot from last year. That is an exceptional ranking for a sandal that has been on the market since 2002. 

There are risks, but the stock offers a high payoff

Crocs' international growth and high brand ranking make the stock an interesting one to consider. Sure, anything can happen that might harm sales. The economy could worsen next year, pressuring sales growth -- but then again, the economy might actually get better, and the stock could double in value in short order.

The upside here is massive with the stock selling for a P/E of about 7 based on this year's earnings estimate. It's impossible to time when the stock will rebound, but Crocs looks like a steal at these prices.