While Crocs (CROX -0.01%) stock is down 29% year to date, it has doubled in the past six months as investors become more confident in its long-term outlook. With rapid revenue growth, a dirt cheap valuation, and an incredibly successful acquisition called Heydude, the footwear giant's bull run could be just getting started.

Let's dig deeper into why Crocs stock could be a great long-term buy. 

Back in fashion?

Founded in 2002 and going public four years later, Crocs is a footwear company specializing in unique foam clogs. Affordable and supremely comfortable, its casual footwear enjoyed massive popularity in the mid-2000s before quickly falling out of fashion by the end of the decade over concerns about its looks and possible market oversaturation. But public perception toward Crocs seems to be changing.

During the COVID-19 pandemic, consumers began increasingly prioritizing comfort and affordability in their footwear purchases. The efforts of Crocs' CEO Andrew Rees, who took the helm in 2017, also can't be overstated. 

Under Rees' leadership, the company has overhauled its market strategy to focus on the ascendant Gen Z demographic. It targets this age segment through collaborations with popular celebrities including Justin Bieber, Bad Bunny, and Post Malone, while also establishing a presence on social media platforms like Bytedance's TikTok and Snapchat. So far the efforts seem to be paying off. 

Crocs' business is booming

Crocs' third-quarter earnings highlight the impact of its brand transformation. Revenue soared 63% year over year to $985 million (accounting for currency fluctuations) thanks to strength in the company's core Crocs brand and its subsidiary, Heydude, which saw sales jump 87% to $269.4 million in the period. 

Crocs acquired Heydude, a men's casual footwear brand, for $2.5 billion in cash and $450 million worth of shares to its founder, Alessandro Rosano, in early 2022. The purchase seems to already be exceeding expectations. 

Flaming stock chart arrow moving upward.

Image source: Getty Images.

At the time of the transaction, Heydude was expected to generate up to $750 million in annual revenue -- a number now revised to as much as $890 million. Management expects Heydude to hit annual sales of $1 billion by 2023 with an operating margin of over 26%, which could mean over $260 million in annual operating income. 

Considering its breakneck growth rate, Heydude is a massive growth driver for Crocs. The added diversification could also make the combined company more resilient to changes in consumer fashion tastes. 

Is the stock a good deal?

While Crocs generates impressive growth, it is also consistently profitable. In 2022, management expects an operating income of $920 million to $950 million and adjusted diluted earnings per share (EPS) of $9.95 to $10.30, which is 22% higher than the 2021 result at the midpoint. 

With a forward price-to-earnings multiple of 8.7, shares are also significantly cheaper than the S&P 500 average of 20. With rival shoemaker Nike trading for a whopping 34 times forward earnings, it's hard to imagine Crocs stock staying this cheap for much longer.