Disclosures

Crocs, Inc.

Disclosure

  • B. Riley & Co., LLC does and seeks to do business with companies covered in its research reports.
  • A portion of this analyst’s compensation is based on the sales, trading and investment banking activities of B. Riley & Co., LLC.
  • B. Riley & Co., LLC makes a market in the securities of the company covered in this report.
  • This report may be distributed by FBR Capital Markets & Co., an affiliate of B. Riley & Co., LLC and as such constitutes third party research. For additional information, please visit http://www.fbr.com/disclosures.
Disclosure Chart

Initiated Coverage on 05/21/2015 with a Neutral Rating and Price Target of $16.00

Ratings Distribution as of June 27, 2017 % with Investment Banking Relationships
Rating Number of Companies Percent of Total
Buy 149 73.8%
Neutral 52 25.7%
Sell 1 0.5%
Total 202 100%
Ratings Distribution as of October 4, 2016 % with Investment Banking Relationships
Rating Number of Companies Percent of Total
Buy 22 95.7%
Neutral 1 4.3%
Sell 0 0.0%
Total 23 100%

Explanation of B. Riley & Co. LLC's Rating System

  • Buy: We generally expect "Buy" rated stocks to materially outperform both the S&P 500 and Russell 2000 as well as other stocks in their sector. Further, we believe that the potential reward relative to the potential risk is particularly attractive.
  • Neutral: We generally believe "Neutral" rated stocks will perform roughly in line with the S&P 500 and Russell 2000 over the intermediate and long term.
  • Sell: We generally expect "Sell" rated stocks to materially underperform both the S&P 500 and Russell 2000 as well as other stocks in their sector. Further, we believe that the potential reward relative to the potential risk is particularly unattractive.

Risks and Considerations

  • Acquisition/Integration - The Company actively evaluates potential acquisitions as part of its growth strategy. Acquisitions pursued by the Company could be dilutive to financial results and result in a difficult, dilutive or expensive integration.
  • Commodity Costs - Should commodity prices for the Company's resources increase, the Company's operating margins could be harmed.
  • Competition - The industry is highly competitive and many of the Company's competitors have greater resources.
  • Currency Exposure - Since the Company purchases its finished goods from foreign manufacturers and sell its products in transactions denominated in U.S dollars, a weakening of the U.S dollar could negatively impact the Company.
  • Cyclical Nature of the Company's Business - Revenue from the Company's businesses have historically correlated positively with both US and world GDP. A cyclical downturn in GDP growth domestically and/or abroad may lead to a material deterioration in the Company's results.
  • Discretionary Spending - The products the Company sells are largely discretionary in nature and any slowdown in consumer spending would have an unfavorable impact on the Company.
  • Distribution/Sales Dependency - The Company relies heavily on its indirect sales channel for much of its sales. A loss of a major distributor or changes in a distributor's payment practices could prove to be detrimental to future sales growth.
  • Economy - Macro-economic issues such as increasing oil and gas prices and a possible drop in consumer spending could have a negative impact on the Company's business.
  • Execution - Management may not execute well on its restructuring efforts as it allocates capital and human resources towards acquisitions and related integration, possibly resulting in lower margins and cash flow.
  • Financial Results - Unpredictable timing of customer orders.
  • Freight costs - Increases in freight costs caused by high gasoline prices or other factors could cause margin erosion or lost market share if the Company raises prices.
  • Growth Plan - There are many factors that may impact the company's ability to achieve its stated growth objectives.
  • International Operations - The Company derives a significant portion of its revenues from outside the United States. The Company is subject to foreign exchange risk and the risks inherent in managing a global Company.
  • Inventory risk - Depending on market conditions, the Company's gross margins could come under pressure if market prices quickly fall within a three to five week time frame.
  • Labor - The Company has a large number of full-time employees and is party to several collective bargaining agreements that cover some of these employees. Additionally, the Company is facing rising labor costs.
  • Loss of Key Personnel - In our opinion, the current management team will be instrumental in executing the Company's growth strategy. The resignation of a key member of management would have a negative impact on the Company.
  • Operating leases - The Company is subject to significant lease liability. Should results deteriorate and the Company be forced to close stores, cash costs to get out of leases could be considerable.
  • Pricing Pressure - The Company's business could be affected by pricing pressure within the market.
  • Product Concentration - A large percentage of the Company's revenues are from one line of products. Any weakness in those sales would have a significant negative impact on the Company's results.
  • Product/Design - The Company's business is subject to the same elements of general fashion/trend risk as that of any apparel brand/retailer.
  • Retail Store Turnaround - The Company has under taken comprehensive turnaround initiatives, which may take time to positively impact results.
  • Seasonality - The Company's results are highly seasonal.
  • Sector Rotation - Despite the decline in valuations for small- and mid-cap bank stocks relative to a year ago, pricing multiples for small-cap banks remain high compared to the S&P 500. Accordingly, the trading price of the Company's common stock may be vulnerable to any sector rotation that might occur.
  • Weather - The weather can significantly impact the Company's results.
  • General Industry - The Company could miss our estimates and/or their financial guidance.
  • Further Potential Risks - See the Company's SEC filings, particularly its 10-K filing, for a discussion of further potential risks.