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Things You Need To Know Ahead Of Crocs' (CROX) Q2 Earnings

By Zacks Investment ResearchJul 22, 2019 09:27PM ET
www.investing.com/analysis/things-you-need-to-know-ahead-of-crocs-crox-q2-earnings-200443062
Things You Need To Know Ahead Of Crocs' (CROX) Q2 Earnings
By Zacks Investment Research   |  Jul 22, 2019 09:27PM ET
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Crocs, Inc. (NASDAQ:CROX) is scheduled to release second-quarter 2019 results on Aug 1. The bottom line of this Colorado-based company surpassed the Zacks Consensus Estimate by a wide margin in the trailing four quarters.

The Zacks Consensus Estimate for earnings in the second quarter stands at 48 cents, suggesting an increase of 37.1% from 35 cents reported in the year-ago period. Notably, the Zacks Consensus Estimate has been stable over the past 30 days. The Zacks Consensus Estimate for revenues is $357.2 million, indicating an increase of approximately 8.9% from the prior-year quarter’s reported figure.

Factors at Play

Crocs focuses on four key growth drivers — clog relevance, sandal awareness, visible comfort technology and personalization. Management believes that demand for clogs will be robust in the second quarter. In fact, the company witnessed favorable response to its spring summer 2019 collection. The company is also on track to expand its base in five core markets — the United States, China, Japan, Korea and Germany — by collaborating with suitable brand ambassadors. Crocs intends to bring new products to its shelves throughout the year.

Further, sandals is another key growth area. Management anticipates annual market for casual sandals to be worth $23 billion globally. Owing to consumers’ favorable response, casual sandals have marked eighth straight time of double-digit growth during the first quarter. We believe the upbeat trend to continue in the second quarter as well.

Additionally, the company is making efforts to boost its e-commerce business. The last quarter saw DTC comps growth of nearly 12% along with 17% rise in e-commerce. It also recorded eight successive quarters of double-digit ecommerce growth. Management anticipates this positive momentum in e-commerce to continue in the second quarter.

Also, the Americas and the EMEA regions are performing well, and expected to keep delivering sturdy results in the near term. Meanwhile, Asia is projected to be a long-term growth driver. Notably, the Zacks Consensus Estimate for revenues in the second quarter in Americas, EMEA and Asia is pegged at $163 million, $70 million and $132 million, depicting growth of 18.1%, 13% and 3.1%, respectively.

These factors are likely to have a positive impact on the company’s top line in the second quarter. In fact, it expects revenues to be $350-$360 million compared with $328 million in the prior-year quarter.

However, Crocs has been facing currency headwinds. The first quarter was affected by negative currency movement to the tune of 140 basis points. Unfavorable currency-translation impact may further drag down margins. For the second quarter, adjusted gross margin is forecasted to be 52.2% compared with 55.3% in year-ago quarter. This view includes foreign currency impact of approximately 150 basis points, and higher freight and distribution costs impact of about 160 basis points.

Crocs, Inc. Price and EPS Surprise

Zacks Model

Our proven model doesn’t show that Crocs is likely to beat bottom-line estimates this quarter. For this to happen, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Although Crocs currently carries a Zacks Rank #2, its Earnings ESP of 0.00% makes surprise prediction difficult.

Stocks Poised to Beat Earnings Estimates

Here are a few companies you may want to consider, as our model shows that these have the right combination to post an earnings beat:

Rent-A-Center (NASDAQ:RCII) has an Earnings ESP of +3.88% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Columbia Sportswear Company (NASDAQ:COLM) has an Earnings ESP of +40.00% and a Zacks Rank #3.

PVH Corp (NYSE:PVH) has an Earnings ESP of +0.33% and a Zacks Rank #3.

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Rent-A-Center, Inc. (RCII): Free Stock Analysis Report

PVH Corp. (PVH): Free Stock Analysis Report

Crocs, Inc. (CROX): Free Stock Analysis Report

Columbia Sportswear Company (COLM): Free Stock Analysis Report

Original post

Zacks Investment Research
Things You Need To Know Ahead Of Crocs' (CROX) Q2 Earnings
 
Things You Need To Know Ahead Of Crocs' (CROX) Q2 Earnings

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