Crocs, Inc. (CROX): A Bull Case Theory 

We came across a bullish thesis on Crocs, Inc. on Emerging Moats Research’s Substack by Brett Schafer. In this article, we will summarize the bulls’ thesis on CROX. Crocs, Inc.’s share was trading at $82.87 as of January 28th. CROX’s trailing and forward P/E were 29.22 and 7.65 respectively according to Yahoo Finance.

Crocs, Inc., together with its subsidiaries, designs, develops, manufactures, markets, distributes, and sells casual lifestyle footwear and accessories for men, women, and children under the Crocs and HEYDUDE Brands in the United States and internationally. CROX is trading at an undemanding valuation that already prices in a meaningful degree of skepticism, making the stock attractive as long as sales do not collapse. At roughly 6x EV/EBIT and 2.5x EV/gross profit, Crocs stands out as inexpensive relative to both its own history and a broader market where the S&P 500 trades at elevated multiples.

While fad risk is impossible to model precisely, the current valuation provides a substantial margin of safety. Concerns around margin compression are understandable given Crocs’ history, as the brand fell out of favor in 2008 and suffered operating losses, but the company is structurally far better positioned today with materially greater scale, an outsourced manufacturing model, broader global exposure, and margin pressure from HeyDude that is beginning to ease.

The poorly timed and overpriced HeyDude acquisition has been a clear misstep, with revenue declining from roughly $1 billion to around $800 million and margins under strain, but management has acknowledged the mistake, taken impairments, and appears more disciplined going forward, with no large acquisitions planned.

This sobriety enables Crocs to focus on operational execution, debt reduction, and aggressive share repurchases, which have already driven a sharp reduction in shares outstanding and could continue at a double-digit annual pace. Meanwhile, the core Crocs brand is showing resilience, with international growth offsetting North American softness and overseas revenue now exceeding domestic sales.

Localized marketing and culturally relevant brand ambassadors in markets like China and India are strengthening global momentum, while the brand’s high-margin price structure allows flexibility in emerging markets. With a market cap of roughly $4.3 billion and close to $1 billion in trailing operating income, Crocs appears capable of generating cash approaching its entire enterprise value over the next several years if the business stabilizes, creating a compelling long-term risk-reward profile.

Previously, we covered a bullish thesis on Crocs, Inc. (CROX) by Taylor Nichols in April 2025, which highlighted strong margins, robust free cash flow generation, and aggressive share repurchases. CROX’s stock price has depreciated by approximately 7.36% since our coverage due to ongoing valuation skepticism and HEYDUDE-related concerns. Brett Schafer shares an identical view but emphasizes margin of safety from discounted multiples.

Crocs, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 37 hedge fund portfolios held CROX at the end of the third quarter which was 36 in the previous quarter. While we acknowledge the risk and potential of CROX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CROX and that has 10,000% upside potential, check out our report about this cheapest AI stock.

READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy NOW 

Disclosure: None.