Luckily, I've booked a series of profits in this stock (bought mostly in the upper $40s to mid $50s and sold mostly in mid $60s to lower $70s) and now am sitting on a less than 0.9% position so the tragedy won't hit me too hard, but let's see what's going on with earnings.
- Crocs' (CROX) third-quarter profits more than doubled, topping estimates, and the maker of colorful resin shoes lifted its guidance for the full year. But the company's revenue and new outlook for the year wasn't enough to satisfy Wall Street's lofty expectations, and shares of Crocs plunged 20% in after-hours trading.
- The Niwot, Colo., company posted third-quarter earnings of $56.5 million, or 66 cents a share, up from $21.5 million, or 27 cents a share, a year earlier. Analysts, on average, expected earnings of 63 cents a share.
- Revenue rose to $256.3 million from $111.3 million the prior year. While that was above Crocs' guidance of $240 million to $250 million, it missed analysts' target of $258.4 million.
- For the year, Crocs said it now sees revenue of $820 million to $830 million, up from its prior forecast of $810 million to $820 million. Analysts, however, were looking for 2007 revenue of $835.7 million.
- Crocs anticipates full-year earnings of $1.94 to $1.98 a share, compared with its previous guidance of $1.89 to $1.93. Wall Street targets earnings of $1.97 a share.
- Looking ahead, Crocs forecast 2008 earnings and revenue growth of 35% to 40% over projected 2007 levels. That implies earnings of $2.62 to $2.77 a share, and revenue of $1.11 billion to $1.16 billion. Analysts are looking for 2008 earnings of $2.56 a share on revenue of $1.13 billion, according to Thomson.
- Crocs beat estimates by 3 cents; but investors are used to a larger beat.
- Crocs beat their own revenue estimate but was $2.4 million below analysts view
- Crocs raised its yearly revenue guidance but that new level is still below analysts view
- Crocs raised its yearly earnings guidance but that is only in line with analysts view
- Crocs raised next years earnings over and above analysts view
The worry with Crocs always has been, when will this act end? The company is trying to branch in other areas (not sure how successful that will be) but I don't think even the shoe portion is close to being done, certainly not globally. Just imagine if this were China Crocs - people would be valuing it at 80x earnings and saying "1.3 billion Chinese x 2 feet x 1 pair of Crocs" and saying the stock should be triple figures. I kid you not.
Anyhow back to reality - another case of a momentum stock with momentum lemmings who only know buy high, sell higher. We're going to be looking at EPS of $2.70 a year from now, and throw whatever multiple you think 35-40% growth implies; even if its 'only 28' we are talking $78. If it's 31 we're talking $86, and if it's 35 we're talking $97. From the current print of $57 after hours, any of those would look fine. But you need to wash out the lemmings first, and broken momentum stocks take time to heal.
Looking at the chart, that base where I last was buying in the $54 - $55 range looks like a potential selloff target; so let's see how it shakes out the next few trading sessions. And yes, whenever something like this happens you will start hearing the saturation story, the end of an era story.... just remember 1.3 billion Chinese need to be owning Crocs (hey it works for no name small cap Chinese stocks growing 8% a year, why not Crocs?) ;) Again, this is a 'battleground' type of stock, where longs and shorts fight tooth and nail, so no need to rush back in. This will settle after the hysteria ends, and then its time to begin a slow accumulation.
Long Crocs in fund; no personal position
