Hey guys, I did a deep dive into Crocs. In this analysis, I will do a brief breakdown of the company and go over some quantitative data, qualitative data and estimate a buy price at the end. One thing I suggest when looking at the data, compare post-2018 data to pre-2018 data. You will notice a significant improvement in the latter, primarily due to new management. Andrew Rees was promoted to CEO in mid-2017.
Overview:Crocs are engaged in the design, development, worldwide marketing, distribution and sale of casual lifestyle footwear and accessories for women, men, and children. Crocs product pillars are its clogs, Jibbitz and personalisation. They sell there products through two distribution channels: wholesale and direct-to-consumer. Crocs is known for their very comfortable clogs and is one of the very few large companies investing heavily into the sandals market, which is a $30 billion market. In 2022, they acquired another footwear company called HEYDUDE, which is a casual footwear company and it is still too early to conclude if that investment is a successful long-term investment.
Quantitative Analysis:
Revenue and footwear unit sales are both growing:
Revenue (In millions)
| 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 |
|---|---|---|---|---|---|---|---|---|
| $3,554 | $2,313 | $1,385 | $1,230 | $1,088 | $1,023 | $1,036 | $1,090 | $1,198 |
Footwear unit sales:
| 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | |
|---|---|---|---|---|---|---|---|---|---|
| Crocs | 115,558 | 102,962 | 69,087 | 67,051 | 59,815 | 57,850 | 56,097 | 57,763 | 55,700 |
| HEYDUDE | 30,519 |
Total stores decreasing but revenue per store is growing. Management appears to have closed off their low performing store and focused their investment in higher performing stores. Good strategy in reducing costs.
Retail Store count:
| 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 |
|---|---|---|---|---|---|---|---|---|---|
| 340 | 373 | 351 | 367 | 383 | 447 | 558 | 559 | 585 | 619 |
Revenue Per Retail store:
| 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 |
|---|---|---|---|---|---|---|---|---|---|
| $3,770,067 | $3,054,517 | $1,974,450 | $1,565,029 | $1,332,013 | $1,090,373 | $878,611 | $854,049 | $907,082 | $838,319 |
Free Cash Flow and Return on Invested Capital looking very pleasing.Free Cash Flow (Owner's Earnings) In 000's
| 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 |
|---|---|---|---|---|---|---|---|---|---|
| $547,226 | $525,132 | $225,140 | $79,848 | $104,052 | $87,292 | $21,097 | ($9000) | ($27,642) | ($43,040) |
Free Cash Flow Historical Growth Rates:
| 5-year | 3-year | 1-year |
|---|---|---|
| 44% | 90% | 4% |
Return On Invested Capital:
| 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 |
|---|---|---|---|---|---|---|
| 16.04% | 66.86% | 47.84% | 23.7% | 38.49% | 46.80% | 9.47% |
Qualitative Analysis & Buy Price:Compare the data from post-2018 period and pre-2018 period. Once Andrew Rees became CEO in mid-2017, metrics all across the board improved for Crocs. 5-year average FCF growth rate is 44% but I will not be estimating that into the future for obvious reasons. Using a DCF, a 10% growth rate with a 15% discount rate gives us a buy price of $116. With a current market price of $82, this leaves us with just over 25% margin of safety if assumptions are correct.One downfall is that I don't believe there is a sustainable MOAT, or a MOAT at all within the brand. The question I ask is, if another major footwear company (Reebok, NIKE, etc) were to invest heavily into the sandal/clogs market, will Crocs be able to keep them at bay and maintain market share? I don't have the answer to that question. I just believe that current management is extremely qualified and long-term shareholders have done extremely well in the past 5 years.
Let me know your thoughts about the company!
[link] [comments] https://www.reddit.com/r/stocks/comments/17936bi/crocs_stock_analysis_crox/
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