Crocs, Inc. (NASDAQ-CROX) Investment Brief

Wed, 2012-10-24
Consumer Retail

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Title: Crocs, Inc. (NASDAQ-CROX) Investment Brief - Asian expansion and new products fuel growth, present buying opportunity

Synopsis: Crocs will announce its Q3-2012 results at market close today (October 24, 2012). We expect Crocs’ results to exceed most street estimates, presenting a possible buying opportunity. Crocs experienced significant growth over the last decade with the introduction of the clog. However, competitors quickly entered the market selling knockoffs at deeply discounted prices. This, coupled with softened demand due to the global economic slowdown, caused Crocs’ revenues to weaken in FY2008 and FY2009. To rebuild the company, Crocs expanded its product lines and began an aggressive expansion into Asia in FY2008. We believe the company’s current share price does not properly reflect the turnaround strategy and results achieved since FY2008. Moreover, in anticipation that winter sales and results from Asia will be better than expected for FY2012, we estimate an upside of 9.8% and limited downside of (4.9%) over the next 3 to 6 months based on Crocs’ closing share price as of October 23, 2012. BlackOre Research Inc. is an independent equity research firm that focuses on publicly-listed companies that have operations based in Canada, China and the United States as well as private issuers in the exempt market that wish to increase their investor exposure. Industries under coverage: Energy & Resources, Real Estate, Technology, Biotechnology, and Diversified Industries.

Report length: 7 pages (excluding legal disclaimer)

Matthew Bovencamp
Peter Fang, CFA