Shareholders in Crocs, Inc. (NASDAQ:CROX) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analysts modelling a real improvement in business performance. The market may be pricing in some blue sky too, with the share price gaining 17% to US$131 in the last 7 days. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.
Following the upgrade, the latest consensus from Crocs' seven analysts is for revenues of US$2.3b in 2021, which would reflect a sizeable 45% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to soar 42% to US$8.51. Prior to this update, the analysts had been forecasting revenues of US$2.0b and earnings per share (EPS) of US$5.69 in 2021. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 17% to US$148 per share. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Crocs at US$185 per share, while the most bearish prices it at US$115. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Crocs' growth to accelerate, with the forecast 110% annualised growth to the end of 2021 ranking favourably alongside historical growth of 6.0% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.6% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Crocs to grow faster than the wider industry.
The Bottom Line
The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Crocs.
Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Crocs going out to 2023, and you can see them free on our platform here..
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