Crocs Analysis
Crocs Financial Analysis
Abstract:
This case looks at analyzing Crocs, Inc. and the tremendous growth they started off with as a new company in the apparel market. We also analyze Crocs competitors based upon three different ratios (PE, EV to EBITDA and EV to Sales) in order to gain an understanding of where Crocs stands in the market at the time of this case (2007). Using the growth rate estimates, we also value the company’s stock value. Certain assumptions are made regarding the sales and revenues for future years which in turn lead to assumed profit margins.
There are three multiples in the case that can be taken into consideration to compare Crocs with other companies based upon.
Price Earnings
EV to EBITDA
EV to Sales
To compare based on Price Earnings (PE), Crocs has $42.69 in trailing 1 in 2007 (Exhibit 6), which is in the range of primarily apparel average, $44.06 (Exhibit 5). When comparing this ratio to the competing companies Zumiez is the closest at $44.49 with the next closest being Deckers with a PE ratio of $30.90. Under Armour has higher PE of $61.09 (Exhibit 5) to Crocs and can be considered as third comparable company.
The next valuation multiple is enterprise value (EV) to earnings before interest, tax, depreciation, and amortization (EBITDA). Crocs EV to EBITDA value was 27.74 which was calculated from (EV) $7,154 million divided by (EBITDA) $258 million which gave us 27.74. To compare based on EV to EBITDA ratio (EE), Crocs ratio is 27.74 trailing in 2007 (Exhibit 6), which is also in the range of primarily apparel
1 Trailing looks backward in time rather than leading which tracks towards forward.
2
average, 23.54 (Exhibit 5). Under Armour has the slightly higher EE ratio of 32 to Crocs. Zumiez has the second closest EE ratio of 21.27 (Exhibit 5) to Crocs. Deckers Outdoor which leads the category of primarily footwear has an EE ratio of 20.21 (Exhibit 5) to Crocs and can be considered as third comparable company.
To compare
Abstract:
This case looks at analyzing Crocs, Inc. and the tremendous growth they started off with as a new company in the apparel market. We also analyze Crocs competitors based upon three different ratios (PE, EV to EBITDA and EV to Sales) in order to gain an understanding of where Crocs stands in the market at the time of this case (2007). Using the growth rate estimates, we also value the company’s stock value. Certain assumptions are made regarding the sales and revenues for future years which in turn lead to assumed profit margins.
There are three multiples in the case that can be taken into consideration to compare Crocs with other companies based upon.
Price Earnings
EV to EBITDA
EV to Sales
To compare based on Price Earnings (PE), Crocs has $42.69 in trailing 1 in 2007 (Exhibit 6), which is in the range of primarily apparel average, $44.06 (Exhibit 5). When comparing this ratio to the competing companies Zumiez is the closest at $44.49 with the next closest being Deckers with a PE ratio of $30.90. Under Armour has higher PE of $61.09 (Exhibit 5) to Crocs and can be considered as third comparable company.
The next valuation multiple is enterprise value (EV) to earnings before interest, tax, depreciation, and amortization (EBITDA). Crocs EV to EBITDA value was 27.74 which was calculated from (EV) $7,154 million divided by (EBITDA) $258 million which gave us 27.74. To compare based on EV to EBITDA ratio (EE), Crocs ratio is 27.74 trailing in 2007 (Exhibit 6), which is also in the range of primarily apparel
1 Trailing looks backward in time rather than leading which tracks towards forward.
2
average, 23.54 (Exhibit 5). Under Armour has the slightly higher EE ratio of 32 to Crocs. Zumiez has the second closest EE ratio of 21.27 (Exhibit 5) to Crocs. Deckers Outdoor which leads the category of primarily footwear has an EE ratio of 20.21 (Exhibit 5) to Crocs and can be considered as third comparable company.
To compare