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As part of our ongoing series at The Acquirer’s Multiple, each week we spotlight a stock from our Stock Screeners that might be a deeply undervalued gem hiding in plain sight.

This week’s spotlight is: Crocs, Inc. (CROX)

Crocs has transformed from a niche footwear brand into a global lifestyle company with iconic, highly recognizable products and a fast-growing portfolio that includes HEYDUDE. Despite strong brand equity, expanding margins, and consistent free cash flow generation, the stock trades at compelling valuation multiples relative to intrinsic value.

What is IV/P (Intrinsic Value to Price)?

IV/P tells you whether a stock offers more intrinsic value than the price you’re paying for it.

• The Calculation: Blends earnings power, reinvestment efficiency, and capital return policy to estimate intrinsic value — a conservative valuation of what the business is worth.
• The Interpretation:
  • IV/P > 1 → Stock may be undervalued
  • IV/P < 1 → Stock may be overvalued
  • The further above 1, the more value you may be getting per dollar invested.

IV/P for CROX: 1.50
CROX’s IV/P of 1.50 suggests its intrinsic value is estimated to be 1.5x its current market price — offering investors a margin of safety and potential upside.

Supporting Metrics

• Market Cap: ~$4.4B
• Enterprise Value (EV): ~$5.9B
• Free Cash Flow (TTM): ~$769M
• Free Cash Flow Yield: ~17.4%
• Acquirer’s Multiple: 6.0

Crocs generates substantial free cash flow with a reasonable valuation multiple, signaling strong operating efficiency and capital allocation discipline.

Revenue & Profitability

• Revenue (TTM): ~$4.14B
• Gross Profit (TTM): ~$2.46B
• Operating Income (TTM): ~$979M
• Net Income (TTM): ~$237M
• Operating Margin: ~24%
• Net Margin: ~5.7%
• Return on Equity: ~12.9%

Crocs’ operating profitability remains robust, supported by high gross margins and strong brand pricing power. The lower net income reflects interest costs on debt, but free cash flow remains resilient.

Balance Sheet Strength

• Total Assets (2024): ~$4.81B
• Total Liabilities: ~$2.98B
• Shareholder Equity: ~$1.84B
• Cash: ~$180M
• Total Debt: ~$1.70B
• Net Debt: ~$1.17B

Crocs carries moderate leverage from its HEYDUDE acquisition but continues to de-lever through strong cash generation.

Capital Returns

• Repurchase of Stock (TTM): ~$578M
• Dividend Yield: None (focus on reinvestment and buybacks)

Management is prioritizing aggressive buybacks, signaling confidence in long-term growth and undervaluation of shares.

Why Might CROX Be Undervalued?

1. Brand Durability: Crocs’ core clog franchise has staying power, complemented by rapid growth in HEYDUDE.
2. Strong Free Cash Flow: CROX consistently converts earnings into cash, even with debt servicing.
3. Valuation Gap: With an Acquirer’s Multiple of 6.0 and IV/P of 1.50, shares appear mispriced relative to fundamentals.
4. Capital Allocation: Aggressive share repurchases enhance per-share value creation.

Conclusion

With an IV/P of 1.50, an Acquirer’s Multiple of 6.0, double-digit free cash flow yield, and ongoing deleveraging, Crocs presents a compelling deep value opportunity in consumer discretionary. For investors seeking strong cash generation, brand durability, and shareholder-friendly capital allocation at a discount — CROX deserves a serious look.

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