Crocs CROX stock has stepped into the limelight this week by surpassing Q1 earnings expectations with flying colors. The footwear and apparel giant has witnessed a meteoric rise of over 40% in its stock value this year, outshining major indices and key competitors like Guess GES and Ralph Lauren RL.
Given this impressive performance, let’s delve deeper to determine whether investing in Crocs stock after the stellar Q1 results is a prudent decision.
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Solid Q1 Results
Crocs’ brand vitality continues to shine as Q1 sales ascended by 6% year over year to $938.63 million, surpassing estimates by 6%. The company’s profitability witnessed a commendable upsurge with earnings of $3.02 per share, marking a 16% surge from the prior year quarter and surpassing EPS estimates by an impressive 34%.
Noteworthy is Crocs’ consistent outperformance, having exceeded both revenue and profit expectations for 16 consecutive quarters, with an average earnings surprise of 17% in its recent quarterly reports.
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Growth Trajectory & Future Outlook
According to Zacks estimates, Crocs is poised for a 3% rise in annual earnings in fiscal 2024, with projections indicating a further 9% expansion in FY25 to $13.56 per share. Total sales are anticipated to grow by 4% this year, with an additional 6% surge expected in FY25, reaching $4.37 billion.
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Appealing P/E Valuation
Despite the remarkable rally in Crocs stock so far this year, CROX is currently trading at just 10.9X forward earnings. This presents a slight discount compared to the Zacks Textile-Apparel Industry average of 12.5X and slightly above P/E valuations of Ralph Lauren at 14.8X and Guess at 9.1X.
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Final Thoughts
At present, Crocs stock holds a Zacks Rank #3 (Hold). With the company’s promising growth trajectory and attractive valuation, retaining CROX shares may prove beneficial. However, potential investors might want to keep an eye out for more opportune moments to buy, given the stock’s scorching start this year.