CR CROX Crocs, Inc. Loading... : Bullish and Bearish Analyst Opinions

Barbarian Capital highlights a New York Post article about Martha Stewart wearing Crocs, but offers no personal forward-looking view on the stock.

Stripping out the $738M HeyDude write-down, Crocs trades at a 6.7x P/E, generating $659M in FCF with 58% gross margins. The core business is highly profitable and cash-generative, which management is using to aggressively buy back stock (share count down 30% since 2013). Long Crocs as a deeply discounted, high-margin cash cow with strong shareholder returns. Continued underperformance or further write-downs related to the HeyDude acquisition.

Wholesale demand in the US and international markets is weak. The company is opening 200-250 new stores to offset this weakness. Opening stores to mask wholesale weakness is a red flag. It increases fixed costs (rent/labor) while the core brand demand is eroding. This suggests management is forcing growth rather than it being organic. SHORT CROX due to deteriorating fundamentals and margin compression risk. Share buybacks could artificially prop up the stock price.

The author believes the pre-market price action signals a bottom and a trend reversal, suggesting the stock is poised to move higher.