This Could Be the Best Value Stock to Buy Before 2026

Core Viewpoint - Investors are currently overlooking value stocks like Crocs, which is trading at a low price relative to its earnings potential, as the focus shifts towards growth stocks, particularly in the AI sector [1] Company Overview - Crocs is trading at its lowest cash-flow multiple in five years, making it a potential value stock before 2026 [2] - The current stock price is $84.98, with a market cap of $4 billion and a gross margin of 59.08% [3] Financial Performance - Revenue for Crocs declined 3% year over year last quarter to $836 million, with the HeyDude brand down 22% to $160 million [4] - Crocs' trailing twelve-month revenue has been around $4 billion but is currently declining [4] - The stock is in a 56% drawdown, indicating a significant decline from its previous highs [5] Growth Opportunities - International revenue increased 6% last quarter to $389 million, indicating growth outside of North America [6] - Crocs has a free cash flow per share of $12.77, with a trailing price-to-free cash flow ratio below 7, suggesting a discounted valuation [7] Shareholder Returns - Management is accelerating share repurchases, which will enhance long-term growth in free cash flow per share and potentially drive the stock price higher [8] - Shares outstanding have decreased by 20% over the last five years, indicating a commitment to returning capital to shareholders [8] Market Position and Future Outlook - Crocs is currently trading at just over 6 times its trailing cash flow, with investors pricing in expectations of declining revenue [10] - The brand has a history of staying relevant and is now expanding globally, which could lead to a turnaround in revenue and cash flow [11] - If Crocs can regain growth, the stock may trade at a higher multiple, presenting a low downside risk with significant upside potential for investors [12]