What happened
Crocs (CROX -0.52%) released some impressive first-quarter results before the market opened today. But its look into the second quarter disappointed investors.
That's what sent the shares plunging as much as 19%. As of 10:25 a.m. ET on Thursday, the stock was still lower by 18.4%. Second-quarter guidance pushed some investors to take profits after the stock had been up more than 35% year to date.
So what
Revenue growth was aided by results from the HeyDude casual-shoe brand the company acquired in February 2022. Sales from that brand more than doubled, and CEO Andrew Rees stated that it "is gaining momentum and experienced outstanding DTC [direct-to-consumer] growth."
That helped lead the company to increase full-year guidance for revenue and adjusted diluted earnings per share (EPS). Even so, investors weren't happy with the guidance for the second quarter.
Image source: Getty Images.
Now what
Management slightly boosted guidance for full-year revenue to a range of $3.95 billion to $4.05 billion. The company previously said it could see sales of up to $4 billion for the year. It also lifted bottom-line estimates for 2023, but investors focused more on what the company said about the current quarter.
For the second quarter, the high end of both revenue and EPS estimates fell short of what analysts are expecting. Estimated adjusted EPS of up to $2.98 would fall well short of analyst expectations for $3.27.
While the outlook for the business remains good, Crocs shares had soared more than 35% in 2023 heading into the earnings results. Many investors have decided to take some of those profits.
But today's drop could be a good opportunity for interested investors. If the company hits the top end of its EPS guidance for 2023, the stock would be trading at a price-to-earnings ratio of about 10.3. That's a good valuation for a retail business growing annual revenue by more than 10%.
