Assessing Crocs Stock After 27% Drop and New Lululemon Collaboration in 2025

Thinking about what to do with Crocs stock lately? You are not alone. The company behind those iconic clogs has had quite a ride on the stock market, making investors question whether its recent underperformance spells a buying opportunity or just more risk ahead. With shares closing at $80.64, Crocs is down 3.7% this past week, 6.7% over the last month, and a substantial 26.7% year-to-date. Looking further back, the one-year return is off by 40.9%. If you zoom out to three or five years, however, you will see gains of 9.5% and an impressive 66.2%, respectively.

These numbers tell a story: the market has clearly adjusted its expectations for Crocs, weighing everything from shifting consumer demand to broad retail sector trends and changes in investor risk appetite. Recent shifts in the broader footwear market, including increased competition and the return of some pandemic-era favorites, have kept Crocs in focus, with investors debating whether the discount in price is justified or a sign of opportunity.

So, how does Crocs stack up on value right now? Using six time-tested valuation checks, the company comes out as undervalued in four, giving it a value score of 4 out of 6. That is encouraging for bargain hunters, but not the whole story. Next, we will break down these valuation approaches, and even more importantly, reveal a powerful framework for thinking about value that tops any single method.

Why Crocs is lagging behind its peers

Approach 1: Crocs Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model is a method that estimates what a business is worth by forecasting its future cash flows and then discounting those amounts back to their present value. This approach aims to find the company's "intrinsic value" based on its projected ability to generate cash for shareholders over many years.

For Crocs, the latest twelve months of Free Cash Flow stands at approximately $746.8 million. Analysts provide detailed estimates for the next several years. Beyond analyst estimates, future Free Cash Flow projections up to 2035 are extrapolated, with figures expected to be around $597.4 million in 2027 and roughly $637.8 million by 2035, all in USD.

By adding up all these future cash flows and adjusting them for time and risk, Crocs' intrinsic value per share is determined to be $143.80. When compared to the current share price of $80.64, the DCF model suggests the stock is trading at a 43.9% discount to its intrinsic value. In other words, based on this model, Crocs appears to be significantly undervalued at today's price.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Crocs.

Our Discounted Cash Flow (DCF) analysis suggests Crocs is undervalued by 43.9%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Crocs Price vs Earnings

The Price-to-Earnings (PE) ratio is generally the go-to valuation metric for companies that are steadily profitable, like Crocs. That's because it directly relates a company’s share price to its earnings, giving investors a quick sense of how much they are paying for each dollar of profit. While some industries or business models favor other ratios, PE is widely trusted when earnings are robust and consistent.

The "normal" or fair PE ratio for a stock depends on expectations for future earnings growth and the risks involved. Higher growth rates or a safer business model can justify a higher PE, whereas slower growth or elevated risks typically call for a lower multiple. So, it makes sense to compare Crocs’ current PE with those of its industry and peers to understand the market’s verdict.

Right now, Crocs trades at a PE of 18.6x. For context, the industry average is 21.1x and peer companies average 17.0x. However, Simply Wall St’s "Fair Ratio" for Crocs is calculated at 54.1x, taking into account factors like Crocs’ earnings growth potential, profit margins, industry conditions and overall risk profile. Unlike simple peer or industry comparisons, this Fair Ratio provides a customized benchmark, blending company specifics with market expectations to deliver a more tailored assessment.

Compared to this Fair Ratio, Crocs’ current PE suggests the stock is materially undervalued. The market is assigning a far lower multiple than what you’d expect based on fundamentals and future prospects.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Crocs Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives. Put simply, a Narrative is your own perspective about a company’s future, linking the story you believe about where Crocs is headed, the numbers you expect such as future revenue, margins, and fair value, and what you think the stock is really worth.

Narratives are a powerful yet accessible tool available to all investors on Simply Wall St’s Community page, trusted by millions of users. By building a Narrative, you connect your expectations for Crocs’ business, such as expansion into new markets or risks from competition, to an actual forecast and a fair value calculation. This way, your investment view is backed up by real numbers, not just hunches.

This framework makes it easy to decide when to buy or sell. When the Fair Value in your Narrative is well above the current price, the stock may be undervalued. If it is below, it could be overvalued. Plus, Narratives update automatically when fresh news or earnings are released, so your outlook always stays relevant.

For example, one Crocs Narrative projects a modest 3% annual revenue growth and a 20% profit margin with a fair value of $151 per share. Another sees revenue declining but margins improving, giving a much lower fair value of $67. This shows how different outlooks can lead to very different investment conclusions.

Do you think there's more to the story for Crocs? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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