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**Crocs Valuation**
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# Introduction
Crocs, Inc (CROX) is an American footware company that manufactures foam "clogs." They were founded in 2002, 24 years ago. I have been following the company for at least a year now and as a disclaimer: I do hold stock in this company and this is not investment advice. I am an amature stock investor and want to strengthen my valuation muscles. I figure, what better way than with a company I am already holding? This valuation is going to focus around a conservative discount cash flow analysis.
# DCF Analysis and Numbers
All the numbers for this dcf analysis have been taken straight from Yahoo Finance as of January 5th 2026.
Number of shares outstanding: 54.62 million
Current share price: 86.95
Discount rate: 10% (I'm using 10% as my required rate of return here - the average return of the S&P 500 over time.)
Growth rate: 0% (Initially assuming zero growth in this company in the future.)
Perpetuity growth rate: 2.5% (Long-term growth rate of United States GDP estimated to be between 2 - 3%.)
Free cash flow:
1. TTM (716,228,000)
2. 2024 (923,139,000)
3. 2023 (814,819,000)
4. 2022 (498,952,000)
5. 2021 (511,249,000)
Now we use these numbers to discount the future cash flows back to present value. I am going to use the average of the past five years (692,877,400) rather than the trailing twelve month value to be more conservative.
Discounted cash flow:
1. Year 1 (629,888,545)
2. Year 2 (572,625,950)
3. Year 3 (520,569,045)
4. Year 4 (473,244,587)
5. Year 5 (430,222,351)
Now we are going to calculate a terminal value for the value of the entire company after this five year forecast period. The terminal value then needs to be discounted back to present value.
Terminal Value (5,879,705,476)
Discounted Terminal Value (3,650,834,503)
With these values we can now get to a conservative estimate of the per share value for the company. Adding up the discounted cash flows for years 1 - 5 yields: 2,626,550,480. We then add the discounted terminal value to get: 6,277,384,984. Now we can simply divide the total value of the company by the number of outstanding shares to get a per share value of 114.93. If we wanted to buy Crocs at around 70% of it's intrinsic value that would be 80.45 per share. Based on the current price of Crocs and this conservative estimate of per share value, the upside is around 30%.
# Risks and Potential Downside
So what are the risks to this story and why is Crocs trading at what seems to be a significant discount? It is important to note that they have a significant amount of debt on the balance sheet. Crocs current debt is 1.71 billion dollars with only 153.97 million in total cash. They took on significant debt in 2022 to fund the purchase of HEYDUDE. That being said, their current ratio stands at 1.40, indicating a strong ability to pay off current debts. Their quick ratio is 0.83, indicating some reliance on inventory to cover short-term liabilities. Furthermore, there was a large sell-off around August 7th, 2025 during which time the stock lost over 20% of it's value. This was spurred by the third quarter earnings announcement that estimated tarrifs would impact third quarter revenue by 9 to 11%. The supreme court has yet to rule whether or not these tarrifs are legal. Crocs reported third quarter revenue for 2025 of 996,301,000 compared with 1,062,200,000 in 2024.
# Closing Thoughts
From a purely subjective point of view I see many people in my life wearing Crocs. I've observed neighbors in my apartment building, my friends and family, all wearing Crocs. These shoes have never really interested me, but I take the time to ask anyone I see how they like their Crocs. The answer is always a resounding, "I love them." I have never heard a bad word about them from anyone, and they always say they plan on buying more. This could just be some type of bias. Maybe the type of person who wears Crocs out in public is just a die-hard fan. Either way I think the brand is positioned to grow. Assuming a scenario of 5% growth compared to the 0% growth above yields an intrinsic value of 120 per share.