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What Do Stock Price Targets of $0, $10, $20 and $30 Mean for Crocs? $CROX

Written by Michael Bigger. Follow me on Twitter.


I posted this on Twitter this morning: Trying to explain why $crox is a $20 stock on my blog. Cant find the proper words. Hard to be a French Canadian writing an English blog post.

I recently explained my investment thesis on Crocs in this POST. I did not provide a fair value or a price target for the stock because it is too difficult to do so.

This post's intention is to comment on a set of targets for CROX using the Price/Earnings ratio (P/E) and the Price/Earnings to Growth ratio (PEG).

Since CROX has been losing money for the past two years, we use an earning power of about $1 per share for our computations (POST). On the growth rate side of the equation, we use Yahoo! Finance's 5-year expected earning growth rate of 18.66%. Take these numbers with a grain of salt. The purpose of this post is about evaluating a range of possibilities and nothing else.

Let's look at different price targets:

 $0: The Washington Post was right about Crocs in July 2009. But HEY! they were wrong

$10: A very conservative P/E of 10. We are basically there

$20: A PEG ratio of about 1

$30: A more aggressive growth rate forecast based on the strong pre-booking trends persisting for a few years. As an example, U.S. wholesale fall and winter pre-bookings are trending at +70%. A high growth rate would scare short sellers away. Although possible, this scenario is highly unlikely.

Gun to my head, I pick $20 as a fair value for CROX. A P/E of 20 is very reasonable considering the growth rates that are about to be reported. What is your price target on CROX?



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