Crocs vs Nike: One data point changed my mind

Recently, Nike has been quite active - the new CEO has taken office, and Buffett's old friend Bill Ackman invested 275 million USD, naturally becoming a hot topic of discussion. However, this does not mean it is the most worth-buying footwear stock.

I am more optimistic about Crocs(CROX), and the reason is very straightforward:

Profit margin crushing

• Nike's operating profit margin is 12%, unchanged for ten years.
• Since CEO Andrew Rees took over Crocs in 2017, it has steadily maintained over 25%, directly doubling.

Valuation is cheaper

• Nike's PE ratio is 23 times, which seems cheap but is just the market average.
• Crocs has a PE ratio of less than 11 times, truly outperforming the market.

Stock buyback efficiency is higher Assuming the profit margin remains constant, the low stock price of Crocs means that management can repurchase more shares with the same profit, and this difference will be significant in the long run.

Hidden Catalyst Nike has expectations for a new CEO, and Crocs is not doing badly either—its HeyDude brand, acquired in 2022, has recently hit a bit of a snag, but management says it will recover in the second half of the year. The CEO stated, “Our confidence in this brand has not changed.”

In simple terms: Nike's story is louder, but Crocs' ledger is prettier.