This article addresses the precipitous decline suffered by the shares of Crocs (CROX: sentiment, chart, options) after its earnings report last week. While the maker of atrocious/comfortable footwear (depending on who you ask) managed to beat analysts' per-share profit and revenue forecasts for the third quarter, investors reacted dramatically when the company issued full-year revenue guidance that fell short of Wall Street's target.

Piper Jaffray analyst Jeffrey Klinefelter regards the stock's drop as an attractive entry point, noting that "We remain highly confident in management's ability to execute to its growth strategy," and notes that this fundamental strength outweighs what he terms a "minor sales slippage." But, the author suggests that the lower-than-expected revenue forecast may have sparked a greater concern: "investors may be selling on suspicion that Crocs have been over-hyped."

Another potential concern for jittery investors is a 220% year-over-year increase in inventory. The build-up is intentional; CROX noted that demand for its shoes was so strong in some markets during the last quarter that it simply didn't have enough supply to keep up. However, in light of the company's disappointing revenue guidance, some former bulls may now be worrying that supply could begin to outpace demand.

From a contrarian standpoint, there are some benefits to the heavy selling pressure that unwound on CROX during the last week of trading. First, even after its recent slump, CROX is still up nearly 92% year-to-date. The steep decline on better-than-expected earnings may simply indicate that all of the weak hands are being shaken out. Additionally, the stock was gapped above some critical support levels prior to the sell-off, which seemed to indicate that the possibility of a correction was high heading into the report.

Plus, there are still some positive catalysts for the shares. Short interest rose by 3.8% during the most recent reporting period, and now accounts for more than 25% of the stock's available float. As short sellers rush to capitalize on the stock's decline, they're accumulating a large amount of sideline cash to fuel future gains in CROX.

Signs of fundamental strength remain for Crocs, as well. Just days after announcing its lower-than-expected revenue guidance, the company announced a stock buyback plan to repurchase 1 million of its outstanding shares. This indicates that the company remains optimistic about its own prospects, and analysts agree no downgrades have come down the pike following the earnings report, and in fact, Wedbush Morgan reiterated its "strong buy" rating on the shares.