Here's Why Crocs (CROX) Q4 Earnings Are Likely To Improve Y/Y

Crocs, Inc. (NASDAQ:CROX) is scheduled to release fourth-quarter 2019 results on Feb 27. This Colorado-based company has a trailing four-quarter positive earnings surprise of 38%, on average. In the last reported quarter, the company reported positive earnings surprise of 39%.

The Zacks Consensus Estimate for fourth-quarter earnings stands at 10 cents, which has been stable over the past 30 days. This suggests a substantial improvement from a loss of 10 cents reported in the year-ago comparable period. The Zacks Consensus Estimate for revenues is $261.1 million, indicating an improvement of 21.2% from the prior-year reported figure.

Factors to Consider

Crocs’ international collaborations and marketing investments, and favorable response to product categories such as clogs, sandals and visible comfort technology are likely to have contributed to its fourth-quarter results. The company’s e-commerce business has been improving at a double-digit rate for quite some time now. Nevertheless, we cannot ignore the impact of foreign currency fluctuations and store closures on the top line.

Nonetheless, management in a recent release guided fourth-quarter 2019 revenues in the band of $260-$262 million. This shows a sharp rise from the reported figure of $216 million in the prior-year period.

The company at its last earnings call highlighted that gains from higher pricing, increased clog sales and leveraging of fixed supply chain costs would help offset headwind associated with lower purchasing power related to currency and changes in channel mix. Notably, Crocs had forecast an improvement in SG&A expenses as a percentage of revenues for the fourth quarter. This is likely to show on operating margin during the quarter under review.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Crocs this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Crocs has a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With Favorable Combination

Here are companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Costco (NASDAQ:COST) has an Earnings ESP of +0.20% and a Zacks Rank of #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Target (NYSE:TGT) has an Earnings ESP of +0.78% and a Zacks Rank #3.

Casey's General Stores (NASDAQ:CASY) has an Earnings ESP of +3.45% and a Zacks Rank #3.

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