CROX: Sales growth of 99% should not intimidate anyone of rising 4th quarter inventories!
Posted by Jack Haddad on February 20, 2008 at 12:59 pm
Bought 2 blocks of CROX at 27.41, and hedged the shares with 200 March strike 28, at 1.80/contract. CROX shares are trading at 10.5x our 2008 EPS estimate, despite expected EPS growth of 33% in 2008 and 19% in 2009. Though Crocs’s inventories increased 188% year-over-year and accounts receivables increased 133%, it had sales growth of 99%! At 10.5x our 2008 EPS estimate and 8.9x our 2009 EPS estimate, however, the stock reflects all of the risks associated with the chance that the company’s inventories are bloated. At $28.05 per share, CROX is currently trading at 10.5x 2008 EPS estimate.
New: Join my personal mailing list for instant trade updates.
Related Posts:
- The two recent downgrades on INTC are unwarranted!
- AMD is maniacally focusing on returning to profitability in Q2 of 2008!
- Garmin– A medical device maker beats the Street by 70%
- SLM
Filed Under Random and Stock Insight and Stock Trades and Uncategorized |
Subscribe to the Blog
|
Recieve Blog Updates by Email!
----------------------------------------
Hi Jack - hmmm…this one makes me sweat a little. CROX had a stellar run but I worry about the shoes being a short term fad. The 10.5x forward P/E may simply reflect the fact that they are on the downhill slope - the rise in inventories is also troubling.
Also, I’m not sure there is any durable competitive advantage here - I’ve seen quite a few less expensive imitations around. Is CROX working to diversify its product line to move into other areas? Thanks.
Half of Crocs sales come from its growing exposure in international markets. There is still opportunity for additional accounts, as CROX develops new international markets and identifies additional domestic partners.