Crocs Rebounds
Crocs (CROX, $11.43, up $1.47) is currently up 15% and hit a high of $12.50 earlier this morning after reporting earnings. The stock got hammered in mid-April falling from $20 to below $10 after cutting first-quarter guidance. Well, today Crocs reported those earnings and investors seem to be cheering the news.
When Crocs warned, analysts had expected the company to report earnings of $0.46 a share and found out they would get earnings between $0.08 and $0.13 a share. The company actually reported a loss of $4.5 million or $0.05 a share on revenue of $198.5 million but would’ve posted a profit of $0.09 a share if not for the write-down for the closure of its Canadian plant.
I guess investors took that as “meeting expectations” and perhaps maybe the short sellers are covering their positions after the company did not cut its full-year earnings outlook. Crocs was a “hot stock” for a while hitting a 52-week high of $75.
Here is one thing to remember when you see a “hot stock” fall out of favor with Wall Street. If a stock takes a sudden 50% drop on bad news realize that it has to go up 100% just to reach the level it was trading at before the drop. Rarely do you see this type of rebound over a few quarters let alone even in a year. Stocks can and do come back from these types of beat-downs but in Crocs’ case it is going to be a hard road ahead.
Sure summer is here and the fact that the company didn’t cut guidance tells us they expect a strong summer. Either way it won’t be as strong as originally planned due to the closure of a plant that was suppose to keep up with supply and demand. The writing is on the wall and while Crocs is having a good day today it may just be a matter of time before the bears take control again.
Rick Rouse
Rick@OptionsMentoring.com
Tags: Crocs, CROX earnings, rebounds