Stock Alert for Crocs Inc. (CROX)

Crocs Inc. (CROX) is a designer, manufacturer, distributor, worldwide marketer and brand manager of footwear for men, women, and children. Crocs shoes combine fun colors and designs and the Company manufactures a product offering that provides new and exciting molded footwear products that feature fun, comfort and functionality. The Company designs and sells an offering of footwear, apparel, gear and accessories that utilize its closed cell-resin, called Croslite. The Crocs product range is divided into three categories: everyday, style and sport. Its everyday product range is composed of fully molded products, which are closest to its core products and targeted widely to several distribution channels. Its style product range consists of more fashionable silhouettes targeted towards higher-end department stores. Its sport product range includes sport inspired products that offers a Crocs point of view for active end uses like boating, walking, and hiking. The company was formerly known as Western Brands, LLC and changed its name to Crocs, Inc. in January 2005.

Crocs Inc. was founded in 1999 and is based in Niwot, Colorado.

Share Statistics (Aug-6-10)			FY 2007	FY 2008	% Chg	Q4 2008	Q4 2009	% Chg
Symbol	CROX	Revenue, $Mn	847.4M	721.6M	14.8%	126.1M	136.0M	7.9%
Current price	$13.15	Gross marg.	58.7%	28.6%	51.3%	n/a	44.3%	n/a
52wk Range:	$14.00-3.85	Oper. margin	28.1%	-26.1%	192.9%	n/a	-9.6%	n/a
Avg Vol (3m):	3,289,210	Net margin	19.8%	25.6%	29.3%	n/a	-8.4%	n/a
Market Cap.	1.13B
Dil. Shares Outst.	85.8M	EPS, $	2.00	-2.22	-211.0%	-0.40	-0.13	67.5%

Source: Reuters.com, SEC Filings.

Financial Summary

CROX recently reported financial results for the second quarter ended June 30, 2010.

Revenue for the second quarter of 2010 increased 31% to $228.0 million, over adjusted revenue of $174.1 million reported in the second quarter of 2009, which excluded $23.7 million in previously impaired product sales that the Company stated would be non-recurring. On a GAAP basis, second-quarter revenue increased 15% year-over-year.

Second quarter 2010 net income was $32.3 million with diluted earnings per share of $0.37, compared to a second quarter 2009 net loss of $30.3 million, or a loss per diluted share of ($0.36).

Year-over-year second quarter changes in the Company’s channel revenue streams were as follows:

• Wholesale sales increased 12% to $140.0 million;
• Retail sales increased 20% to $66.4 million; and
• Internet sales increased 24% to $21.6 million.

Changes in the Company’s regional revenue streams during the same quarterly periods were as follows:

• Americas increased 23% to $104.8 million;
• Asia increased 11% to $88.6 million; and
• Europe increased 7% to $34.6 million.

Gross profit for the second quarter of 2010 increased 30% to $131.9 million, or 57.8% as a percentage of sales, compared to $101.1 million, or 51.1% of sales in the year ago period. Selling, General, & Administrative expenses (including foreign exchange, restructuring, impairment, and charitable contributions) decreased 25.8% to $93.2 million or 40.9% of sales, versus $125.6 million, or 63.5% of sales in the second quarter of 2009.

Balance Sheet

The Company’s cash and cash equivalents as of June 30, 2010, increased 25% to $96.9 million compared to $77.5 million at June 30, 2009. The Company had no bank debt at June 30, 2010.

Inventory increased 2% to $113.6 million at June 30, 2010, from $111.6 million at June 30, 2009, resulting in inventory turnover of 3.5 times in the current quarter.

The Company ended the second quarter of 2010 with accounts receivable of $94.0 million compared to $67.1 million at June 30, 2009.

Guidance

For the third quarter of 2010, the Company expects revenue of approximately $205 million, a 24% increase over third quarter 2009 adjusted revenue of $165.7 million, which excludes $11.5 million in impaired product sales that the Company has stated would be non-recurring. On a GAAP basis, the company expects third quarter 2010 revenue to grow approximately 16% year-over-year.

The Company expects diluted earnings per share for the third quarter 2010 to increase to approximately $0.22 to $0.24 versus $0.09 in third quarter 2009, which excludes last year’s one time tax benefit of $0.16.

Financial Strength (Aug-6-2010)	Company	Industry	Sector	S&P 500
Quick Ratio (MRQ)	1.66	1.51	0.61	0.73
Current Ratio (MRQ)	2.57	1.91	0.77	0.86
Long-Term Debt to Equity(MRQ)	0.55	8.00	21.81	115.99
Total Debt to Equity (MRQ)	1.01	10.54	37.82	174.26

Source: Reuters.com, SEC Filings.

Analyst Consensus

This is the consensus forecast amongst 4 polled investment analysts. Against the Crocs Inc company.

Analyst Detail	Buy	Outperform	Hold	Underperform	Sell	No Opinion
Latest	2	1	1	0	0	0
4 weeks ago	1	2	1	0	0	0
2 months ago	1	2	1	0	0	0
3 months ago	1	2	1	0	0	0
Last year	0	0	5	0	0	0

The 4 analysts offering 12 month price targets for CROX have a median target of 13.50, with a high estimate of 15.00 and a low estimate of 10.00. The median estimate represents a 7.31% increase from the last price of 12.58.

Source: www.ft.com

Consensus Estimates Analysis

	# of Estimates	Mean	High	Low	1 Year Ago
SALES (in millions)
Quarter Ending Sep-10	4	190.27	196.70	185.22	157.23
Quarter Ending Dec-10	4	148.24	152.40	143.84	129.28
Year Ending Dec-10	4	725.99	736.20	721.20	534.54
Year Ending Dec-11	4	806.24	828.31	783.37	–
EARNINGS (per share)
Quarter Ending Sep-10	4	0.16	0.17	0.15	-0.03
Quarter Ending Dec-10	4	0.03	0.04	0.01	-0.08
Year Ending Dec-10	4	0.49	0.55	0.45	-0.29
Year Ending Dec-11	4	0.71	0.75	0.65	–
LT Growth Rate (%)	2	15.00	15.00	15.00	16.67

Source: http://www.reuters.com/finance/stocks/financialHighlights?symbol=CROX.O

Investment Highlights

CROX shares rose 5% to $13.29 in late July after the maker of colorful footwear topped the consensus targets of analysts for the second quarter. CROX, which was forced to reshape its business after overexpansion and excess inventories led to steep losses two years ago, swung to a second-quarter profit of 37 cents a share on a 15% increase in sales. CROX shares have more than doubled in value over the last year, steadily climbing off an August 2009 low of $4.33.

For the three months that ended in late June, CROX earned $32.3 million, or 37 cents per share. That compares with a prior-year loss of $30.3 million, or 36 cents per share.

Revenue climbed 15% to $228 million from $197.7 million last year. CROX said its sales improved across all channels — rising 24% online, 20% at its retail stores and 12% to wholesale customers. The results topped the average estimate of analysts surveyed by Thomson Reuters, who had expected the company to earn 22 cents per share with revenue of $220.6 million.

Looking ahead, CROX said it expects to earn 22 cents per share to 24 cents per share in the third quarter on revenue of $205 million. That’s well ahead of last year’s adjusted profit of 9 cents per share on revenue of $165.7 million, and tops analysts’ current forecast of 16 cents per share on $190.3 million in revenue.

Source: http://company.crocs.com , www.yahoo.com

Technical Analysis

Source: http://stockcharts.com

CROX is trading above its 13 day moving average. This is considered to be the sign of a bullish trend. There is added weight to this indication because the moving average is rising and suggests that there has been buying interest in this stock.

CROX’s recent volatility has been greater than normal. This is evidenced by the increased distance between the upper and lower Bollinger Bands. These bands measure volatility using standard deviation and a large width is due to high volatility. Additionally, CROX is trading near its upper Bollinger Band. This suggests that the stock price is high relative to its recent price action.

The MACD for CROX currently indicates a strong bullish signal for two reasons. First, the MACD is above the signal line, a 9day moving average. Second, the MACD is above 0 which implies that the underlying moving averages are trending higher.

Comparative Analysis

Company Name	Ticker	Price per	Mrkt. Cap.	P/E		P/S
Aug-6-2010	symbol	Share, $	$ Mn	2009	2010	2009	2010
Deckers Outdoor Corp.	DECK	49.27	1.91B	14.98	n/a	2.47	n/a
Wolverine World Wide Inc.	WWW	28.49	1.41B	16.49	n/a	1.31	n/a
Timberland Co.	TBL	18.86	1.01B	15.64	n/a	0.76	n/a
Footwear Median			1.44B	15.70	n/a	1.51	n/a
Crocs Inc.	CROX	13.15	1.13B	n/a	n/a	1.66	n/a

Source: Thomson Financial

Insider Trading Activity

NET SHARES PURCHSE ACTIVITY Inside Purchases – Last 6 Months
	Shares	Transaction
Purchases	n/a	0
Sales	268,002	12
Net Shares Purchased (Sold)	(268,002)	12
Total Insider Shares Held	3.7M	n/a
% Net Shares Purchased (Sold)	(6.8%)	n/a

Net Institutional Purchases — Prior Qtr to Latest Qtr
	Shares
Net Shares Purchased (Sold)	(4,067,330)
% Change in Institutional Shares Held	(6.48%)

Source: Yahoo Finance

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