Bear of the Day: Crocs (CROX)

Crocs (CROX) shares have had quite a run in the past six months, from $9 in September to nearly $16 last week. In fact, the stock rallied 3.6% during a week when the market fell 6%.

When I tried to figure out why this serial earnings decliner -- it has been Bear of the Day several times during its decline from $16 in 2015 to $6 in early 2017 -- was in such a rally mode, I narrowed it down to a couple of optimistic analysts and short-covering.

On February 28, after the company reported an 11% earnings miss, the stock gapped down to $12. Stifel Nicolaus analysts put out a note recommending investors buy the pullback which offered sizable upside to their still-intact price target of $16.

And Piper Jaffray analyst upgraded CROX from Neutral to Overweight with a $15 PT.

Well, those goals have been quickly achieved in just 3 weeks since the company reported their Q4. But when you look at the recent lukewarm recovery in earnings estimates, one has to wonder if all this bullishness is justified.

Here's the proprietary Zacks Price & Consensus chart which compares evolving consensus views of annual EPS estimates vs the stock price...

As you can see, after 3 big earnings beats in 2017, this year's profit projection is no higher than it was over a year ago. The stock price has run well ahead of the earnings turn-around from three years of losses to finally one of profitability again.

So while there might be a reason for owning CROX shares at $15, I don't see it right now. And I even love the shoes for my family in all seasons!

But maybe it's that early look at 2019 estimates which have a Zacks consensus of 73-cents EPS and represent 135% growth?

That's great, but the corresponding sales growth projections don't get me excited with a 0.5% advance this year from $1.02 billion to $1.03 billion. And next year's top line is only slightly more positive at $1.06 billion, for a mere 2.6% bump.

I'd sidestep this "croc" until the stock drops back to $12 again or the estimates start snapping upwards.

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