Summary: ON SALE
Score: 12/20
MOS: 79%
Share Price: $42
Sticker Price: $209
Is CROX (Crocs) a good investment?
Crocs was founded in 2002 and is based out of Niwot, CO. The shoe was originally developed as a boating shoe. The first model produced by Crocs, “The Beach”, was unveiled in 2001 at the Fort Lauderdale Boat Show in Florida, and sold out 200 pairs on the spot. It has since sold 300 million pairs of shoes to date.
Crocs has exclusive rights to a proprietary foam resin known as Croslite. The foam forms itself to the wearer’s feet and offers medical benefits according to a number of Podiatrists. Croslite is weather, mold, and mildew resistant.
I think most of you would agree that Crocs aren’t known to be the most fashionable shoe. That’s okay because in this case the phrase “Form Follows Function” should be applied as they are highly used by nurses, doctors, and medical industry personnel because of their comfort and non-slip traction.
Let’s take a step back and look at Crocs from a manufacturing standpoint…
A Croc shoe is made of ONE material, Croslite. In comparison, other shoes are much more complex. Nike, Adidas, Skechers, Vans, etc all contain FOUR OR MORE materials including polyester, rubber, foam, and cotton. This means Croc shoes are significantly less expensive to manufacture.
Crocs low manufacturing costs have allowed the company to have higher net profit margins compared to its US based competitors. Here are those numbers…
Crocs: 9.71%
Nike: 6.79%
Skechers: 6.64%
Here are the average retail price ranges…
Crocs: $20 – $40
Nike: $90 – $200
Skechers: $75 – $150
Here is how the competition stacks up within Tykr:
NKE (NIKE)
Summary: OVERPRICED
Score: 6/20
Share Price: $119
Sticker Price: $14
SKX (Skechers)
Summary: OVERPRICED
Score: 14/20
Share Price: $31
Sticker Price: $21
With a low price point as well as higher profit margins, this is one reason why Crocs is operating as efficiently as it is compared to the competition.
Aside from the financials, I did a little research on their philanthropic mission and Footwearnews.com reported in April that Crocs is giving away 20,000 pairs of shoes to health care workers.
I did a little further digging into other philanthropic activities and Nativepartnership.org reported in 2013 that Crocs donated 600 pairs of shoes to Native Americans on the Pine Ridge Reservation who struggle with diabetes. Native Americans have the highest prevalence of type 2 diabetes in the world. Their risk is twice as high as any other ethnic group. Crocs shoes are wider and aerated, adding significantly more comfort to those with swollen diabetic feet.
I love stories like this. Although 600 shoes doesn’t compare in numbers to the 20,000 listed above, it’s the action of making a difference that matters most.
Is CROX a good investment? The answer is yes because not only is this company run by good leaders who are truly focused on helping others, but the financials are equally as impressive. With a score of 12/20, the financials are solid and with a share price of $42 vs a sticker price of $209, this stock has some room to grow.
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