Crocs Q2 Earnings Coming Up: What You Should Know

Crocs, Inc. CROX is scheduled to release second-quarter 2024 results on Aug 1 before market open. The Zacks Consensus Estimate for revenues is pegged at $1.10 billion, indicating a rise of 2.7% from the prior-year reported figure.

The consensus estimate for earnings per share has remained stable in the past 30 days at $3.54. The estimate indicates a drop of 1.4% from the year-ago period's reported number.

The Broomfield, CO-based company has a trailing four-quarter earnings surprise of 17.1%, on average. In the last reported quarter, its bottom line surpassed the Zacks Consensus Estimate by 34.2%.

Key Factors to Note

Crocs' second-quarter sales are likely to have benefited from the solid consumer demand across the Crocs and HEYDUDE brands, backed by effective pricing actions. Also, strength in clogs, sandals and personalization is an added positive. The company's Jibbitz business has also been doing well for quite some time now, backed by growth in Asia.

Additionally, lower inbound freight costs, coupled with favorable ocean freight rates and lower promotional activity, are expected to have bolstered gross margins during the quarter. On its last quarter's earnings call, the company expected revenue growth of 1-3% year over year at constant currency for the second quarter. It had projected the Crocs brand's revenues to grow 6-8% year over year while the HEYDUDE brand's revenues were anticipated to plunge 20-23%. Management had envisioned adjusted earnings to be in the range of $3.40-$3.55 per share and the adjusted operating margin to be 26.5%.

However, Crocs has been facing challenges related to the operating environment and rising costs associated with the HEYDUDE acquisition. Also, investments in distribution and logistics have been acting as deterrents. Inflation, higher interest rates and geopolitical tensions are other concerns. The company has been struggling with higher SG&A expenses for a while now, driven by investments in talent, marketing and DTC. These limitations are likely to have contributed to reduced profitability.

Valuation Picture

From a valuation perspective, Crocs offers an attractive opportunity, trading at a discount relative to historical and industry benchmarks. With a forward 12-month price-to-earnings ratio of 9.40x, which is below the five-year high of 34.18x and the Textile - Apparel industry's average of 11.79x, the stock offers compelling value for investors seeking exposure to the sector.

The recent market movements show that Crocs' shares have risen 21.5% in the past six months against the industry's 23% decline.

Zacks Model

Our proven model doesn't conclusively predict an earnings beat for Crocs this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that's not the case here.

Crocs currently has an Earnings ESP of 0.00% and a Zacks Rank of 2.

Stocks Poised to Beat Earnings Estimates

Here are some companies, which according to our model, have the right combination of elements to post an earnings beat:

Adidas ADDYY currently has an Earnings ESP of +2.39% and a Zacks Rank of 2.

ADDYY is likely to register bottom and top-line growth when it reports second-quarter results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $6.4 billion, indicating 9.2% growth from the figure reported in the year-ago quarter.

The consensus estimate for ADDYY's earnings is pegged at 69 cents a share, indicating a 165.4% rise from the year-ago quarter's actual. The consensus mark has risen significantly from 20 cents per share pegged in the past 30 days.

MGM Resorts International MGM currently has an Earnings ESP of +15.35% and a Zacks Rank of 3. MGM is likely to register bottom and top-line growth when it reports second-quarter  results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $4.2 billion, indicating 6% growth from the figure reported in the year-ago quarter.

The consensus estimate for MGM Resorts' earnings is pegged at 66 cents a share, implying an 11.9% increase from the year-earlier quarter. The consensus mark has moved down by a penny in the past seven days.

Ralph Lauren RL currently has an Earnings ESP of +0.56% and a Zacks Rank of 3. RL is likely to register a top-line decrease when it reports first-quarter fiscal 2025 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $1.5 billion, indicating a 0.6% drop from the figure reported in the prior-year quarter.

The consensus estimate for Ralph Lauren's earnings is pegged at $2.45 per share, implying a 4.7% jump from the year-ago quarter. The consensus mark has moved up a penny in the past seven days.

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