What To Expect From Crocs’ Stock in 2025?

Crocs‘ (NASDAQ: CROX) stock has recently experienced significant growth, surging 19% in the last week to $107 (Feb. 18), outpacing the S&P 500’s 1% growth. This upward momentum is largely attributed to the company’s Q4 results, which exceeded expectations driven by strong international sales and digital growth. Specifically, revenue reached $990 million (against a forecast of $961 million), representing a 3% year-over-year (y-o-y) increase, while adjusted earnings per share of $2.52 (down 2% y-o-y) surpassed forecasts.

Looking ahead, the company expects revenues in the first quarter of 2025 to be down approximately 3.5% y-o-y. Adjusted diluted earnings per share in Q1 2025 are expected to be between $2.38 and $2.52. For the full year 2025, Crocs expects to drive mid-single-digit revenue growth for the Crocs Brand, while proactively managing the anticipated 7-9% decline in HeyDude revenue. To mitigate the impact of currency and tariff fluctuations, Crocs is targeting an adjusted operating margin of 24%. The company’s adjusted earnings per share are projected to fall within the range of $12.70 to $13.15. Investors should prioritize Crocs’ digital transformation, international expansion, and effective SG&A expense management as key drivers of future growth and sustained momentum in 2025. Separately, if you want upside with a smoother ride than an individual stock, consider the High Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.

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The company’s recent performance has been a story of contrasting fortunes, with its flagship brand thriving, while the HeyDude brand, acquired in 2022, has struggled to gain traction. The company’s Crocs Brand delivered a notable 4% revenue growth in Q4, whereas the HeyDude Brand reported flat revenue. Investors’ frustration with HeyDude is understandable, given the $2.5 billion acquisition’s lack of progress in delivering expected growth and profitability. However, the company’s reliance on its core Crocs Brand, which accounts for 80% of its business, is a significant positive. With the vast majority of profits stemming from the Crocs Brand, the company’s stock may warrant a higher valuation multiple, considering its robust revenue growth and margins. Notably, Crocs’ Q4 adjusted operating margin exceeded 20%, outperforming industry norms, although declining from last year’s 24%. In comparison, Crocs’ peer Nike’s (NYSE: NKE) operating margin stood at 11% in its most recent quarter (Q2). Despite this, Crocs’ stock is trading at a forward price-to-earnings ratio of just 8 times this year’s estimated earnings, potentially indicating undervaluation.

Crocs reported fiscal 2024 consolidated revenues of $4.1 billion, up 3.5% y-o-y. Its adjusted EPS increased 9.5% to $13.17 and diluted EPS increased 24% to $15.88. By brand, Crocs revenue grew 9% y-o-y to $3.3 billion, driven by a 10% increase in direct-to-consumer sales and an 8% rise in wholesale. In contrast, Hey Dude brand revenue declined 13% to $824 million, due to a 4% drop in direct-to-consumer and a 20% decrease in wholesale sales.

The increase in CROX stock over the last 4-year period has been far from consistent, with annual returns being considerably more volatile than the S&P 500. Returns for the stock were 105% in 2021, -15% in 2022, -14% in 2023, and 17% in 2024. The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is considerably less volatile. And it has comfortably outperformed the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics.

[1] Returns as of 2/19/2025
[2] Cumulative total returns since the end of 2016