Crocs: Revenue and Growth Rate

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“Crocs, Inc.” (UVA-F-1589)
1. Which of the comparable companies appears to be a good match to Crocs at the time of the case? Which would be a good match in five years? Use these multiples to provide additional estimates of the value of Crocs (in other words, calculate a value for Crocs using a current multiple, and calculate a value for Crocs using Yeung’s cash flow model but with a terminal value based on a multiple).

Using EV to EBITDA multiple:
-Current Crocs’ multiple is 27.74. Comparable companies that apprear to be good match to Crocs at the time of the case are Under Armour (32.00), Zumiez (21.27) and Deckers Outdoor (20.21). -In 5 years, Crocs’ multiple is equal to EV (2011)/ EBITDA (2011) =7154/791=9.044248. Comparable companies that appear to be good match to Crocs in 5 years are Columbia Sportswear (8.77), Phillips-Van Heusen (8.84) and Warnaco Group (8.91). Using EV to Sales multiple:

-Current Crocs’ multiple is 8.62. None of the comparable companies appears to be good match to Crocs at the time of the case. -In 5 years, Crocs’ multiple is equal to EV (2011)/ Sales (2011) = 7154/3367=2.12474. Comparable companies that appear to be good match to Crocs in 5 years are Volcom (2.66) and Nike (1.90) Valuation based on current EV to EBITDA with Discount rate =10.96% = [Net profit at the end of 2011*(32+21.27+20.21)/3]/ (1.1096^5) = [519*(32+21.27+20.21)/3]/(1.1096^5)

=7557.584479
2. What would you consider reasonable, “high,” and “low” growth estimates (median, 25th, and 75th percentile growth estimates) for 2008 and for the long run? YearRevenueGrowth Rate
20031.165
200413.521061%
2005105.581681%
2006355236%
2007847.35139%
2008137062%
2009205850%
2010278835%
2011336721%
201235696%
25th quartile35 %
Median62%
75th Quartile236 %

For 2008, it will be reasonable to use the median growth estimate of 62% because 2008 is approximately the middle point of the period from 2004 to 2012. For the long run, it...
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