Since posting third quarter earnings, Crocs (SYM: CROX) crashed.
Oversold at $145, it’s just starting to pivot higher after finding strong support at $140. It’s also starting to pivot from overextensions on RSI, MACD and Williams’ %R. From $145, we’d like to see AMD initially refill its bearish gap at around $162.50.
Disappointed by the ongoing weakness of its HEYDUDE brand, it gapped from about $117.76 to a recent low of $101.86. But at this point, the drop is overkill. Not only is the CROX stock now wildly oversold on RSI, MACD and Williams’ %R, but insiders are buying.
In fact, director John Replogle bought another 2,240 shares of CROX after the stock’s negative reaction to earnings. He bought the shares at an average price of $112.599 for just over $252,222. He bought 1,996 shares in August, and 1,972 shares for $126,749 in March.
Also, while investors were rattled by the HEYDUDE news, the company still beat expectations for revenue and EPS. Revenues were up 2% year over year to $1.06 billion. Core Crocs brand revenues were up 7.4% to $858 million. Adjusted earnings were up 10.8% year over year to $3.60 a share, which was better than expectations of $3.10. Cash flow from operations also jumped to $670.5 million from $580.7 million year over year.
With a substantial amount of negativity now priced in, severely oversold conditions, and the insider buying, we’d use weakness as an opportunity.
