I’m not saying that Crocs is a growth company. In fact, let’s assume the opposite. Let’s say that either the new CEO or a strategic buyer scoops up this company, takes the top line from the $847mm peak down to a core of $400mm and runs at an 8% margin (I can defend this rate six ways til Sunday). At $1.40, it suggests that this thing is trading at less than 2x EBITDA. Each 1x turn by that math is about $45mm in Enterprise Value. Not bad off a base of $86.
Is it scary to buy a name like this whose product is in a decline, management is in question, and 4Q financials have yet to be finalized? You betcha. Could there be accounting adjustments and charges under the new CEO? Probably. But this is a tough business to commit all-out accounting fraud to the extent that it will take an established brand with net cash and put it into bankruptcy.
I remain floored that no one has bought this at an $86mm EV.
If it’s not going bust, BUY THE BONE!