Why Crocs Stock Is Becoming Too Cheap to Ignore

After Crocs (NASDAQ:CROX) closed the acquisition of a competing footwear company in mid-February, its stock has plummeted to 52-week low. Yet the demand for the casual shoemaker's products remains high, and its business fundamentals are impressive. Here's why its stock may be ready to hit the ground comfortably.

Crocs recently closed on its acquisition of HEYDUDE, a private casual footwear brand known for its lightweight, affordable shoes, for $2.5 billion. Crocs took out a new $2 billion loan, drew $50 million under its revolving current facility, and issued 2.8 million shares (about 4.5% of its shares outstanding) to HEYDUDE's founder to fund the deal. Since Crocs announced the acquisition in December 2021, its stock has dropped nearly 50%.

One possible reason could be the meteoric rise of Crocs's total long-term net debt. In the past four years, its long-term net debt rose 540% from $120 million to $771 million, as the company has heavily invested in digital sales, Chinese markets, and supply chain infrastructure. We can't know yet whether those investments will pay off in the long term, but the $2 billion the company just added to its already growing long-term debt could worry some investors as interest rates continue to rise.

Source Fool.com