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Crocs, Inc. (NASDAQ:CROX) shareholders will have a reason to smile today, with the analysts making substantial upgrades to next year's forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects. The market may be pricing in some blue sky too, with the share price gaining 13% to US$76.36 in the last 7 days. It will be interesting to see if today's upgrade is enough to propel the stock even higher.
Following the upgrade, the most recent consensus for Crocs from its seven analysts is for revenues of US$1.7b in 2021 which, if met, would be a sizeable 37% increase on its sales over the past 12 months. Per-share earnings are expected to leap 55% to US$3.41. Prior to this update, the analysts had been forecasting revenues of US$1.5b and earnings per share (EPS) of US$2.93 in 2021. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.
Check out our latest analysis for Crocs
It will come as no surprise to learn that the analysts have increased their price target for Crocs 17% to US$77.75 on the back of these upgrades. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Crocs, with the most bullish analyst valuing it at US$90.00 and the most bearish at US$60.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Crocs' rate of growth is expected to accelerate meaningfully, with the forecast 37% revenue growth noticeably faster than its historical growth of 2.9% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 10% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Crocs to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for next year. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, Crocs could be worth investigating further.