Crocs (CROX) Makes Fresh Highs After Strong Earnings

Crocs, Inc. (CROX) shares rose nearly 2% during Tuesday's session after the company posted better-than-expected third quarter financial results.

Key Takeaways

  • Crocs shares rose nearly 2% during Tuesday's session after the company posted better-than-expected third quarter financial results.
  • Digital sales experienced the greatest growth at 35.5%, but same-store sales were up 16.2%, reflecting underlying retail growth as well.
  • The stock could see some consolidation within its price channel over the coming sessions, but the intermediate-term trend remains bullish.

Revenue rose 15.6% to $361.7 million during the third quarter, beating consensus estimates by $17.72 million, while non-GAAP earnings came in at 94 cents per share, beating consensus estimates by 24 cents per share. Gross margins rose 480 basis points to 57.2% during the quarter, which helped boost the bottom-line financial performance.

Comparable sales were up 16.2% during the quarter, and digital sales grew 35.5% to represent 37.7% of total sales compared to 32.2% the year prior. Management expects fourth quarter revenue to rise 20% to 30% versus a 9% consensus and full-year revenue to be 5% to 7% higher, with capex spending of $50 million for the full year.

From a technical standpoint, the stock remains in a rising channel following its third quarter financial results. The relative strength index (RSI) rose further into overbought levels with a reading of 77.22, but the moving average convergence divergence (MACD) remains in a bullish uptrend. These indicators suggest that the stock could see some near-term consolidation before a move higher.

A price channel appears on a chart when a security's price becomes bounded between two parallel lines. Depending on the direction of the trend, the channel may be termed horizontal, ascending, or descending.

Traders should watch for consolidation within its price channel over the near term but an overall continuation of its intermediate-term bullish trend. The upper end of the price channel stands at around $56.00, while the lower end stands at around $47.00. If the stock breaks out, traders could see a move toward fresh 52-week highs. If the stock breaks down, traders could see a move toward Fibonacci and trendline support at $37.61 over the coming sessions.

The Bottom Line

Crocs shares moved about 2% higher after the company reported better-than-expected third quarter financial results. While the stock remains in a bullish uptrend, technical indicators suggest that it could see some consolidation within its price channel.

The author holds no position in the stock(s) mentioned except through passively managed index funds.

Source: Read Full Article