Many investors see Crocs as shoo-in - Rocky Mountain News
"Crocs makes its shoes in 18 different colors, but all investors are seeing is green.
The Niwot-based company jacked up the price and size of its IPO on Monday after seeing strong Wall Street demand for its stock. Crocs had planned a $144 million offering, pricing its shares at $13 to $15.
The company added more than a million shares and increased the price to $19 to $20, a potential $227 million offering. The value of the company would top $700 million at those prices.
The final word isn't in, however - Crocs will make its final pricing decision tonight for Wednesday's trading. Given the investor excitement, Crocs' stock may continue its rise.
"Interest kind of mushroomed," said Francis Gaskins, the editor of a Web site called ipodesktop.com, which has made Crocs its "pick of the week." Gaskins said a heavy recent calendar of offerings may have distracted some of the Wall Street firms that typically invest in consumer-goods companies. "People started to look at Crocs seriously at the end of last week."
What they see is a company that increased its sales 822 percent in the first nine months of 2005 from the prior year. It swung from a loss to net income of $12.8 million. It has gross profit margins of 57 percent and operating margins of 27 percent through the first nine months. And it sold more than 6 million pairs of shoes in 2005.
Right now, the company's trailing price-to-earnings ratio is about 35 to 37, meaning the stock is priced for rapid growth.
"In a short amount of time, we've become a pretty important brand in the footwear industry," Crocs CEO Ron Snyder told Wall Street investors last week on its IPO "roadshow."
"We've had explosive growth since inception, and we do have multiple opportunities to continue to grow the company going forward," Snyder said.
Snyder showed Wall Street pictures of its 2006 model shoes, as well as pictures demonstrating its "broad demographic appeal" from ages 2 to 102.
One Swedish advertisement Snyder showed has ex-Avalanche player Peter Forsberg, while another photo has actress Heather Locklear in front of a big rack of Crocs.
"I think our shoes make her look pretty good - what do you guys think?" Snyder asked.
As Crocs' shares begin trading on the Nasdaq on Wednesday, company executives plan to gather around a computer in the Minneapolis offices of lead banker Piper Jaffray & Co., spokeswoman Tia Mattson said.
Afterward, they will head to Las Vegas for the start of the annual trade show of the World Shoe Association, one of the largest trade gatherings for the company.
Doubters wonder if Crocs have long-term appeal. Renaissance Capital's IPOHome.com Web site, which also features Crocs as its featured IPO, said it believes "longer term, this is a risky company since its products appear faddish, competition is fierce, and visibility into its future success is low."
But Brian Robinhold, a Boulder resident who has mostly invested in the hometown tech industry, sees an opportunity.
"All the kids in my neighborhood are wearing them, they say all their friends at school are wearing them, my 3-year-old is wearing them, and I'm wearing them," Robinhold said. "It seems to have a lot of potential.""
Read the entire article, Many investors see Crocs as shoo-in, written by David Milstead for the Rocky Mountain News at (http://www.rockymountainnews.com/drmn/money/article/0,2777,DRMN_23908_4446564,00.html)
