Earnings Beat: Crocs, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models
Last week, you might have seen that Crocs, Inc. (NASDAQ:CROX) released its full-year result to the market. The early response was not positive, with shares down 5.4% to US$75.56 in the past week. It looks like a credible result overall - although revenues of US$1.4b were what the analysts expected, Crocs surprised by delivering a (statutory) profit of US$4.56 per share, an impressive 81% above what was forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
View our latest analysis for Crocs
Following the latest results, Crocs' eight analysts are now forecasting revenues of US$1.72b in 2021. This would be a huge 24% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to descend 18% to US$3.82 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$1.69b and earnings per share (EPS) of US$3.50 in 2021. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 11% to US$93.75per share. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Crocs, with the most bullish analyst valuing it at US$104 and the most bearish at US$76.00 per share. This is a very narrow spread of estimates, implying either that Crocs is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Crocs' rate of growth is expected to accelerate meaningfully, with the forecast 24% revenue growth noticeably faster than its historical growth of 4.2%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 10% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Crocs is expected to grow much faster than its industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Crocs' earnings potential next year. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that in mind, we wouldn't be too quick to come to a conclusion on Crocs. Long-term earnings power is much more important than next year's profits. We have forecasts for Crocs going out to 2025, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 3 warning signs for Crocs (1 shouldn't be ignored) you should be aware of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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