Why Crocs Stock Rallied 15% at the Open Today

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What happened

Shares of Crocs (NASDAQ:CROX), the maker of the iconic plastic shoes that bear the company’s name, rose a huge 15% in early trading on Tuesday. There’s little question about what investors were excited about, given the company’s pre-market earnings release. But there were more positives here than just last quarter’s strong results.

So what

To get the basics out of the way, Crocs’ first-quarter 2021 sales grew 64% year over year to $460 million. Digital sales expanded 75%, now making up around 32% of total sales, and sales in Asia increased 26%. Adjusted earnings, meanwhile, increased from $0.22 per share in the first quarter of 2020 to a far more impressive $1.49 per share this year.  

Image source: Getty Images.

Those are clearly good results, and it’s not surprising that investors would be pleased. However, the good news doesn’t stop there. Crocs also beat analyst estimates on the top and bottom lines. It bested Wall Street’s earnings call by a particularly impressive 66% or so. Investors tend to like it when a company exceeds expectations.

But there’s still more good news, as the company also increased its full-year guidance from revenue growth in the 20% to 25% range to the 40% to 50% range. That’s a directional shift that investors find appealing, with the magnitude of the change simply amplifying the positive takeaway.  

Now what

There was a lot of good news in Crocs’ earnings release, and Wall Street was obviously pleased with what it read. Long-term investors, however, should bear in mind that the stock is up around 350% over the past year and is about 130% above where it started 2020, before the pandemic was a material issue. There is a lot of good news priced in here. That said, for those who favor growth over value, the sales growth that the company has achieved of late (and is still expecting over the next year) is pretty impressive.  

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.