Should I Buy Crocs (CROX)? Finance YouTuber Analysis

The YouTuber is bullish on Crocs despite recent weak guidance, citing its low forward P/E of 7.7. He believes the business is fundamentally sound and not being disrupted, with demand fluctuations being temporary. He argues that Crocs, as an affordable product, is well-positioned when consumers are financially stretched, and expects multiple expansion with even a small uptick in growth or margins.

“This is a company that going to have multiple expansion because it has a price to earnings multiple on a forward basis of just 7.7. So I think that's a great valuation from a from a company that long-term is still growing.” — ▶ 9:20

Travis Hoium argues that Crocs is an undervalued stock, trading at a low price-to-earnings multiple of 7.7 and a free cash flow yield of 15.3%. He highlights the strong performance of the core Crocs brand and the company's aggressive share buyback program, which is enhanced by the current low valuation. While acknowledging the struggles of the Hey Dude brand, he believes the overall business is more solid than investors perceive, offering significant upside potential.

“I think there's a lot to like with Crocs right now the downside risk I think is relatively low and the upside potential is relatively high if he do does start to turn around so worst case scenario management just buys back 15 % of the shares outstanding on an annualized basis” — ▶ Watch clip

The YouTuber prefers Crocs over Lululemon, noting its extremely low forward P/E ratio below 9, which he considers a commodity multiple. He suggests that this low valuation implies minimal downside and significant upside if the company shows any increase in growth, potentially moving to a double-digit P/E ratio.

“Out of the two companies in the situations they sit in right now, I would rather own Crocs than Lululemon. I think the valuation gives it less downside and if there's any increase in growth at all, any revenue increases, Crocs should move up to double-digit PE ratios.” — ▶ 27:00