On Wednesday, B.Riley maintained a Neutral rating on Crocs (NASDAQ:CROX) but increased the stock price target to $122 from the previous $95. This change reflects the firm's expectations ahead of the company's first-quarter earnings report, which is scheduled for release at the end of April.
Crocs has provided guidance for the quarter, anticipating revenues between $870 million and $889 million, operating income between $192 million and $195 million, and earnings per share (EPS) in the range of $2.15 to $2.25. The consensus among analysts sets the expected revenues at $880 million, operating income at $196 million, and EPS at $2.23.
B.Riley's own estimates are slightly different, projecting revenues of $874 million, operating income of $207 million, and EPS of $2.33 for Crocs. The firm also forecasts that the direct-to-consumer (DTC) sales composition will increase by 110 basis points for Crocs and by 370 basis points for HEYDUDE in the year 2024.
It is important to note that DTC gross margins are significantly higher, by approximately 25 percentage points, than those of wholesale.
In terms of trading multiples, Crocs' stock has fluctuated between 6.2 times to 9.5 times enterprise value to trailing twelve months (EV/TTM) EBITDA in the first quarter of 2024. Over the last five quarters, the range has been wider, from 5.2 times to 10.1 times EV/TTM EBITDA.
The revenue guidance for HEYDUDE in 2024 has been adjusted upward slightly, despite an anticipated decrease of 20% to 23% for the first quarter of 2024. This suggests an expected growth of 7% for the remainder of the year.
The revision of the stock price target from $95 to $122 by B.Riley is based on these financial projections and the trading multiples observed. The firm's analysis indicates a positive outlook for Crocs' direct-to-consumer margins, which is a key factor in the raised price target for the stock.
InvestingPro Insights
As Crocs (NASDAQ:CROX) gears up for its first-quarter earnings report, it's vital for investors to consider the latest market data and insights. According to InvestingPro, Crocs' market capitalization stands at $7.79 billion, with a P/E ratio of 9.98, reflecting a market valuation that may appeal to value investors, especially when considering the company's near-term earnings growth. The P/E ratio has seen a slight adjustment in the last twelve months as of Q4 2023, dipping to 9.72.
InvestingPro Tips suggest that while six analysts have revised their earnings expectations downwards for the upcoming period, the company is still expected to be profitable this year. This is supported by a strong return over the last three months, with a price total return of 26.22%. Furthermore, the stock has experienced a significant price uptick over the last six months, with a 52.67% return, indicating robust investor confidence.
For those looking to delve deeper into Crocs' financial health, InvestingPro offers additional insights. There are 11 more InvestingPro Tips available, which can provide a more comprehensive understanding of the company's performance and potential. Interested investors can take advantage of these insights and use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
Overall, these metrics and insights can provide a more nuanced view of Crocs' financial standing and market performance, complementing the analysis provided by B.Riley and offering investors a richer context for their investment decisions.
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