Crocs footwear (CROX)

Crocs, Inc. is a designer, manufacturer, distributor, worldwide marketer and brand manager of footwear and accessories for men, women and children. The Company’s products include footwear and accessories that utilize closed cell-resin, called Croslite. In addition to footwear, it also offers accessories, which generated approximately 4% of the total revenues. Footwear products are divided into four product offerings: Core, Active, Casual and Style. Core product range offers molded products that are derivatives of the original Crocs Classic designs; Active product range includes -inspired products and footwear suited for activities, such as boating, walking, hiking and even recovery after workouts; Casual product includes sporty and relaxed styles, and Style product offering includes stylish products.

I never cared about Crocs inc. before yesterday. The company valuation was so high that even on first glance it was way overvalued. Yesterday, the stock plunged 38% in a single day! It smelled panic. I couldn’t figure out on first sent, but it could also smell value opportunity.

Financials

The company free cashlow for the TTM is 77m on a market cap of 1500m market cap or 5%. A ratio a little low but healty. Most of it comes from operation and not from inventory reduction or account payable collection. This ratio should improve with higher sales.

Sales are improving year over year for the last 3year from 690 to 940 TTM. A great improvement. EPS went from a loss in 2008 to a healthy 0.76 in previous fiscal year and 1.2 TTM. On TTM basis the stock is traded at a p/e ratio around 12. 5 year average is bad. The company lost 2.20 per share in 2008 and 0.49 in 2009.

These quick informations raise red flags enough for me to pass on CROX.

What do you think of CROX?

Disclosure : none.

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