CROX: ‘Awesome’

05/12/09 10:20PM EDT

Keith pings us with tickers each night that are standouts in his trade factor models. Tonight he said, "CROX looks awesome ... $2.27 TRADE support." That's the first time I've heard him use the word 'awesome' in months.

At $2.58 we're looking at an EV of $187mm. Yes, this has been a triple over the past two months. But I still find a major problem poking holes in my logic that the new CEO (or a strategic buyer who scoops up this company) could take CROX back to its roots, and takes the top line from the $847mm peak down to a core of $400mm and run at a 10% margin (I can defend this rate six ways til Sunday). That suggests about $43mm in EBITDA. With no store openings, Crocs can sustain itself on $10-15mm/yr in capex - so we're looking at about $25-$30mm in free cash. Not bad for 7x free cash with a call option on monetizing the Crocs brand above and beyond the current consensus view (or lack thereof).

© 2024 Hedgeye Risk Management, LLC. The information contained herein is the property of Hedgeye, which reserves all rights thereto. Redistribution of any part of this information is prohibited without the express written consent of Hedgeye. Hedgeye is not responsible for any errors in or omissions to this information, or for any consequences that may result from the use of this information.