Intrinsic value of Crocs, Inc. - CROX

Previous Close

$22.45

  Intrinsic Value

$62.08

stock screener

  Rating & Target

str. buy

+177%

Previous close

$22.45

 
Intrinsic value

$62.08

 
Up/down potential

+177%

 
Rating

str. buy

We calculate the intrinsic value of CROX stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 1.6

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  8.50
  8.15
  7.83
  7.55
  7.30
  7.07
  6.86
  6.67
  6.51
  6.36
  6.22
  6.10
  5.99
  5.89
  5.80
  5.72
  5.65
  5.58
  5.53
  5.47
  5.43
  5.38
  5.34
  5.31
  5.28
  5.25
  5.23
  5.20
  5.18
  5.16
Revenue, $m
  1,180
  1,277
  1,377
  1,481
  1,589
  1,701
  1,818
  1,939
  2,065
  2,196
  2,333
  2,475
  2,624
  2,778
  2,939
  3,107
  3,283
  3,466
  3,658
  3,858
  4,067
  4,286
  4,515
  4,755
  5,006
  5,269
  5,544
  5,833
  6,135
  6,452
Variable operating expenses, $m
  349
  378
  407
  437
  469
  502
  537
  572
  609
  648
  686
  728
  771
  817
  864
  913
  965
  1,019
  1,075
  1,134
  1,196
  1,260
  1,327
  1,398
  1,472
  1,549
  1,630
  1,715
  1,804
  1,897
Fixed operating expenses, $m
  734
  750
  766
  783
  801
  818
  836
  855
  873
  893
  912
  932
  953
  974
  995
  1,017
  1,039
  1,062
  1,086
  1,110
  1,134
  1,159
  1,184
  1,210
  1,237
  1,264
  1,292
  1,321
  1,350
  1,379
Total operating expenses, $m
  1,083
  1,128
  1,173
  1,220
  1,270
  1,320
  1,373
  1,427
  1,482
  1,541
  1,598
  1,660
  1,724
  1,791
  1,859
  1,930
  2,004
  2,081
  2,161
  2,244
  2,330
  2,419
  2,511
  2,608
  2,709
  2,813
  2,922
  3,036
  3,154
  3,276
Operating income, $m
  97
  149
  203
  260
  319
  381
  445
  512
  583
  656
  735
  815
  900
  988
  1,080
  1,177
  1,278
  1,385
  1,497
  1,614
  1,738
  1,867
  2,003
  2,147
  2,297
  2,456
  2,622
  2,797
  2,982
  3,176
EBITDA, $m
  112
  164
  220
  277
  337
  400
  466
  534
  606
  681
  759
  841
  926
  1,016
  1,110
  1,209
  1,312
  1,420
  1,534
  1,654
  1,779
  1,911
  2,049
  2,195
  2,348
  2,509
  2,679
  2,857
  3,044
  3,242
Interest expense (income), $m
  1
  6
  8
  9
  11
  13
  14
  16
  18
  20
  22
  24
  26
  28
  31
  33
  36
  38
  41
  44
  47
  50
  54
  57
  61
  64
  68
  73
  77
  81
  86
Earnings before tax, $m
  91
  141
  194
  249
  306
  366
  429
  494
  563
  634
  711
  789
  871
  957
  1,047
  1,141
  1,240
  1,344
  1,453
  1,567
  1,687
  1,814
  1,946
  2,086
  2,233
  2,387
  2,550
  2,721
  2,900
  3,090
Tax expense, $m
  25
  38
  52
  67
  83
  99
  116
  133
  152
  171
  192
  213
  235
  258
  283
  308
  335
  363
  392
  423
  456
  490
  526
  563
  603
  645
  688
  735
  783
  834
Net income, $m
  66
  103
  142
  182
  224
  267
  313
  361
  411
  463
  519
  576
  636
  699
  764
  833
  905
  981
  1,060
  1,144
  1,232
  1,324
  1,421
  1,523
  1,630
  1,743
  1,861
  1,986
  2,117
  2,255

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  509
  550
  593
  638
  685
  733
  783
  836
  890
  947
  1,006
  1,067
  1,131
  1,197
  1,267
  1,339
  1,415
  1,494
  1,577
  1,663
  1,753
  1,847
  1,946
  2,050
  2,158
  2,271
  2,390
  2,514
  2,644
  2,781
Adjusted assets (=assets-cash), $m
  509
  550
  593
  638
  685
  733
  783
  836
  890
  947
  1,006
  1,067
  1,131
  1,197
  1,267
  1,339
  1,415
  1,494
  1,577
  1,663
  1,753
  1,847
  1,946
  2,050
  2,158
  2,271
  2,390
  2,514
  2,644
  2,781
Revenue / Adjusted assets
  2.318
  2.322
  2.322
  2.321
  2.320
  2.321
  2.322
  2.319
  2.320
  2.319
  2.319
  2.320
  2.320
  2.321
  2.320
  2.320
  2.320
  2.320
  2.320
  2.320
  2.320
  2.321
  2.320
  2.320
  2.320
  2.320
  2.320
  2.320
  2.320
  2.320
Average production assets, $m
  60
  65
  70
  76
  81
  87
  93
  99
  105
  112
  119
  126
  134
  142
  150
  158
  167
  177
  187
  197
  207
  219
  230
  243
  255
  269
  283
  297
  313
  329
Working capital, $m
  74
  80
  87
  93
  100
  107
  115
  122
  130
  138
  147
  156
  165
  175
  185
  196
  207
  218
  230
  243
  256
  270
  284
  300
  315
  332
  349
  367
  387
  406
Total debt, $m
  147
  175
  204
  235
  266
  299
  333
  369
  406
  444
  484
  526
  569
  614
  662
  711
  762
  816
  872
  931
  992
  1,056
  1,123
  1,193
  1,267
  1,343
  1,424
  1,508
  1,597
  1,690
Total liabilities, $m
  345
  374
  403
  433
  465
  498
  532
  567
  604
  643
  683
  724
  768
  813
  860
  909
  961
  1,014
  1,071
  1,129
  1,190
  1,254
  1,321
  1,392
  1,465
  1,542
  1,623
  1,707
  1,796
  1,888
Total equity, $m
  163
  177
  190
  205
  220
  235
  251
  268
  286
  304
  323
  342
  363
  384
  407
  430
  454
  480
  506
  534
  563
  593
  625
  658
  693
  729
  767
  807
  849
  893
Total liabilities and equity, $m
  508
  551
  593
  638
  685
  733
  783
  835
  890
  947
  1,006
  1,066
  1,131
  1,197
  1,267
  1,339
  1,415
  1,494
  1,577
  1,663
  1,753
  1,847
  1,946
  2,050
  2,158
  2,271
  2,390
  2,514
  2,645
  2,781
Debt-to-equity ratio
  0.900
  0.990
  1.070
  1.150
  1.210
  1.270
  1.330
  1.380
  1.420
  1.460
  1.500
  1.540
  1.570
  1.600
  1.630
  1.650
  1.680
  1.700
  1.720
  1.740
  1.760
  1.780
  1.800
  1.810
  1.830
  1.840
  1.860
  1.870
  1.880
  1.890
Adjusted equity ratio
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321
  0.321

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  66
  103
  142
  182
  224
  267
  313
  361
  411
  463
  519
  576
  636
  699
  764
  833
  905
  981
  1,060
  1,144
  1,232
  1,324
  1,421
  1,523
  1,630
  1,743
  1,861
  1,986
  2,117
  2,255
Depreciation, amort., depletion, $m
  14
  15
  16
  17
  18
  20
  21
  22
  23
  25
  24
  25
  27
  28
  30
  32
  33
  35
  37
  39
  41
  44
  46
  49
  51
  54
  57
  59
  63
  66
Funds from operations, $m
  81
  118
  158
  199
  242
  287
  334
  383
  434
  487
  543
  601
  663
  727
  794
  865
  939
  1,016
  1,098
  1,183
  1,273
  1,368
  1,467
  1,571
  1,681
  1,796
  1,918
  2,046
  2,180
  2,321
Change in working capital, $m
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  17
  17
  18
  19
  20
Cash from operations, $m
  75
  112
  151
  192
  235
  280
  326
  375
  426
  479
  534
  592
  653
  717
  784
  854
  928
  1,005
  1,086
  1,171
  1,260
  1,354
  1,453
  1,556
  1,665
  1,780
  1,900
  2,027
  2,161
  2,301
Maintenance CAPEX, $m
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -19
  -20
  -21
  -22
  -24
  -25
  -27
  -28
  -30
  -32
  -33
  -35
  -37
  -39
  -41
  -44
  -46
  -49
  -51
  -54
  -57
  -59
  -63
New CAPEX, $m
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
Cash from investing activities, $m
  -16
  -17
  -18
  -19
  -21
  -22
  -23
  -25
  -26
  -28
  -29
  -31
  -33
  -35
  -36
  -39
  -41
  -42
  -45
  -47
  -50
  -52
  -56
  -58
  -62
  -64
  -68
  -72
  -74
  -79
Free cash flow, $m
  59
  95
  133
  173
  215
  258
  303
  350
  400
  451
  505
  561
  621
  683
  747
  816
  887
  962
  1,041
  1,123
  1,210
  1,301
  1,397
  1,498
  1,604
  1,715
  1,833
  1,956
  2,086
  2,223
Issuance/(repayment) of debt, $m
  27
  28
  29
  30
  32
  33
  34
  36
  37
  38
  40
  42
  43
  45
  47
  49
  51
  54
  56
  59
  61
  64
  67
  70
  73
  77
  81
  84
  88
  93
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  27
  28
  29
  30
  32
  33
  34
  36
  37
  38
  40
  42
  43
  45
  47
  49
  51
  54
  56
  59
  61
  64
  67
  70
  73
  77
  81
  84
  88
  93
Total cash flow (excl. dividends), $m
  85
  124
  163
  204
  246
  291
  337
  386
  437
  490
  545
  603
  664
  728
  795
  865
  938
  1,016
  1,097
  1,182
  1,271
  1,365
  1,464
  1,568
  1,677
  1,792
  1,913
  2,041
  2,174
  2,315
Retained Cash Flow (-), $m
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -21
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -30
  -32
  -33
  -35
  -36
  -38
  -40
  -42
  -44
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  72
  110
  149
  189
  231
  275
  321
  369
  419
  472
  526
  583
  643
  706
  772
  841
  914
  990
  1,070
  1,154
  1,242
  1,335
  1,432
  1,535
  1,643
  1,756
  1,875
  2,001
  2,133
  2,271
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  69
  101
  129
  156
  179
  200
  217
  231
  241
  247
  250
  249
  245
  237
  227
  214
  199
  182
  165
  147
  128
  111
  94
  78
  64
  51
  40
  31
  23
  17
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Crocs, Inc. is engaged in the design, development, manufacturing, marketing, distribution and sale of casual lifestyle footwear and accessories for men, women, and children. The Company's segments include Americas, Asia Pacific and Europe. Its products include footwear and accessories that utilize its closed-cell resin, called Croslite, as well as casual lifestyle footwear that use a range of materials. Its Croslite material enables the Company to produce non-marking, and odor-resistant footwear. As of December 31, 2016, the Company sold its products in over 90 countries through domestic and international retailers and distributors, and directly to consumers through its company-operated retail stores, outlets, e-commerce store sites and kiosks. The Company's sales channels include wholesale, which includes distributors, Crocs owned retail and Crocs e-commerce.

FINANCIAL RATIOS  of  Crocs, Inc. (CROX)

Valuation Ratios
P/E Ratio -103.3
Price to Sales 1.6
Price to Book 4.1
Price to Tangible Book
Price to Cash Flow 41.3
Price to Free Cash Flow 91.8
Growth Rates
Sales Growth Rate -5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 22.2%
Cap. Spend. - 3 Yr. Gr. Rate -20.4%
Financial Strength
Quick Ratio 74
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0.5%
Interest Coverage -6
Management Effectiveness
Return On Assets -2.3%
Ret/ On Assets - 3 Yr. Avg. -4.8%
Return On Total Capital -3.9%
Ret/ On T. Cap. - 3 Yr. Avg. -6.7%
Return On Equity -3.9%
Return On Equity - 3 Yr. Avg. -6.9%
Asset Turnover 1.8
Profitability Ratios
Gross Margin 48.3%
Gross Margin - 3 Yr. Avg. 48.2%
EBITDA Margin 2.7%
EBITDA Margin - 3 Yr. Avg. 0.5%
Operating Margin -0.6%
Oper. Margin - 3 Yr. Avg. -2.5%
Pre-Tax Margin -0.7%
Pre-Tax Margin - 3 Yr. Avg. -2.8%
Net Profit Margin -1.5%
Net Profit Margin - 3 Yr. Avg. -3.2%
Effective Tax Rate -128.6%
Eff/ Tax Rate - 3 Yr. Avg. -31.6%
Payout Ratio -75%

CROX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CROX stock intrinsic value calculation we used $1088 million for the last fiscal year's total revenue generated by Crocs, Inc.. The default revenue input number comes from 0001 income statement of Crocs, Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our CROX stock valuation model: a) initial revenue growth rate of 8.5% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for CROX is calculated based on our internal credit rating of Crocs, Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Crocs, Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of CROX stock the variable cost ratio is equal to 29.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $718 million in the base year in the intrinsic value calculation for CROX stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Crocs, Inc..

Corporate tax rate of 27% is the nominal tax rate for Crocs, Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the CROX stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for CROX are equal to 5.1%.

Life of production assets of 2.8 years is the average useful life of capital assets used in Crocs, Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for CROX is equal to 6.3%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $150.308 million for Crocs, Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 73.435 million for Crocs, Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Crocs, Inc. at the current share price and the inputted number of shares is $1.6 billion.

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