Despite the Federal Reserve’s three interest rate hikes to combat inflation this year, the Consumer Price Index (CPI) hit a multi-decade high of 9.1% last month. After another 75 basis-point rate hike yesterday for the second straight month, the central bank is expected to increase rates further. Therefore, a recession looks unavoidable.
The U.S. economy contracted at a 0.9% annual rate in the second quarter after a 1.6% decline in the first quarter, making many analysts believe that a recession has arrived. Moreover, an unexpected decline in global business activity and a sudden rise in weekly jobless claims are expected to keep the market highly volatile in the upcoming weeks.
Amid this backdrop, low profitability, weak financials, and unfavorable analyst estimates make shares of The Boeing Company (BA), Archer Aviation Inc. (ACHR), Beyond Meat, Inc. (BYND), Carvana Co. (CVNA), and fuboTV Inc. (FUBO) risky investments. These stocks could keep losing in the near term.
The Boeing Company (BA)
BA designs, manufactures, and sells commercial jetliners, military aircraft, satellites, missile defense systems, human space flight, and launch systems and services worldwide. It operates through Commercial Airplanes (BCA); Defense, Space & Security (BDS); Global Services (BGS); and Boeing Capital (BCC) segments. It has a 1.37 beta.
On July 21, 2022, BA debuted the first P-8A Poseidon aircraft for New Zealand in its Royal New Zealand Air Force (RNZAF) livery as their new multi-mission maritime patrol aircraft.
The four Boeing P-8A Poseidon aircrafts purchased by the New Zealand Government will replace the current fleet of six aging P-3K2 Orion aircraft and offer advanced capabilities to maintain situational awareness in neighboring waters on and below the surface of the ocean. This should help BA nurture its relationship with the Government.
For fiscal second quarter ended June 30, 2022, BA’s total revenues decreased 1.9% year-over-year to $16.68 billion. The company’s non-GAAP operating earnings came in at $490 million, representing a 35.1% year-over-year decline.
Its net earnings came in at $160 million for the quarter, down 71.8% from the year-ago period. BA’s non-GAAP loss per share came in at $0.37, versus a $0.40 EPS in the prior-year period. As of June 30, 2022, the company had $10.09 billion in cash and cash equivalents.
Analysts expect a negative EPS estimate for fiscal 2022 ending December 31, 2022. It missed Street EPS estimates in each of the trailing four quarters.
Its trailing-12-month ROTC and ROA have been negative compared to their positive industry averages. The stock has lost 22.5% year-to-date and 1.3% over the past week to close the last trading session at $156.09, down 35.3% from its 52-week high of $241.15.
BA’s POWR Ratings reflect this bleak outlook. The stock has an overall rating of D, which equates to Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
It has an F grade for Growth and a D for Stability, Quality, and Sentiment. Click here to see the additional ratings for BA’s Value and Momentum. BA is ranked #62 of 76 stocks in the C-rated Air/Defense Services industry.
Archer Aviation Inc. (ACHR)
ACHR is an aerospace company that designs, manufactures, and operates electric vertical takeoff and landing (eVTOL) aircraft for use in urban air mobility (UAM) networks.
The aircraft offers multiple sensors and computers, including an air data system, radar and laser altimeters, quad-redundant flight computers, weight-on wheel (WOW), and downward-facing cameras. It has a 1.50 beta.
On July 27, 2022, ACHR entered into an agreement with diversified technology and manufacturing company Honeywell International Inc. (HON) to make use of HON’s flight control actuation and thermal management technologies in ACHR’s 12 tilt six configurations and provide improved in-cabin experience for passengers.
Offering precise navigation, lower weight, higher efficiency, and higher reliability in its size and power class, HON’s technologies will allow ACHR to draw on its safety benefits and accommodate the unique elements of its eVTOL aircraft.
ACHR’s loss from operations for its fiscal 2022 first quarter ended March 31, 2022, decreased 31.2% year-over-year to $65.30 million. The company’s net loss came in at $59.20 million, down 37.6% from the prior-year period.
Its loss per share came in at $0.25, representing an 85.3% rise from the year-ago period. As of March 31, 2022, the company had $704.20 million in cash and cash equivalents, down 6% from the end of fiscal 2021.
The consensus EPS estimate is negative for fiscal 2022 ending December 31, 2022. Its trailing-12-month ROTC and ROA have been negative as compared to their positive industry averages. The stock has lost 39.7% year-to-date but rose 15.6% over the past week to close the last trading session at $3.64, down 65.5% from its 52-week high of $3.64.
ACHR’s weak fundamentals are reflected in its POWR Ratings. The stock has an overall F rating, which equates to a Strong Sell in our proprietary rating system.
ACHR has an F grade for Growth and Value and a D for Stability and Quality. Click here to see additional ratings for ACHR’s Momentum and Sentiment. ACHR is ranked #71 in the Air/Defense Services industry.
Beyond Meat, Inc. (BYND)
BYND manufactures, markets, and a range of plant-based meat products across the beef, pork, and poultry platforms internationally. Its products are sold through grocery, mass merchandiser, club stores, convenience stores, natural retailer channels, direct-to-consumer, and various food-away-from-home channels. It has a 1.65 beta.
BYND’s gross profit for its fiscal 2022 first quarter ended April 2, 2022, increased 99.4% year-over-year to $190,000. The company’s loss from operations came in at $97.63 million, up 296.1% from the year-ago period.
Its adjusted net loss came in at $100.46 million, indicating a 283% rise from the prior-year period. BYND’s non-GAAP loss per share came in at $1.58, representing a 276.2% rise from the year-ago period. As of April 2, 2022, the company had $547.86 million in cash and cash equivalents, down 25.3% from the end of fiscal 2021.
Analysts expect the company’s EPS to be negative for fiscal 2022 ending December 31, 2022. It missed Street EPS estimates in each of the trailing four quarters.
Its trailing-12-month ROTC and ROA have been negative compared to their positive industry averages. The stock has lost 50.2% year-to-date and 10.6% over the past week to close the last trading session at $32.44, down 76% from its 52-week high of $32.44.
The stock’s weak prospects are reflected in its POWR Ratings. The stock has an overall F rating, which equates to a Strong Sell in our proprietary rating system.
BYND has an F grade for Value, Growth, Stability, Quality, and Sentiment. Click here to see the additional ratings for BYND’s Momentum. BYND is ranked last in the B-rated Food Makers industry.
Carvana Co. (CVNA)
CVNA operates an e-commerce platform for buying and selling used cars. Its platform allows customers to research, identify and inspect a vehicle using its 360-degree vehicle imaging technology and schedule delivery or pick-up. It has a 2.64 beta.
On May 10, 2022, CVNA acquired ADESA’s U.S. physical auction business from used car dealer KAR Auction Services, Inc. (KAR) for $2.20 billion. This will help CVNA further strengthen its physical auction and retail capabilities to better serve buyers, sellers, and consumers across the automotive industry.
For its fiscal 2022 first quarter ended March 31, 2022, CVNA’s gross profit came in at $298 million, down 11.8% from the prior-year period. While its net loss increased 517.1% year-over-year to $506 million, its loss per share fell 528.3% to $2.89. The company had $247 million in cash and cash equivalents as of March 31, 2022, down 38.7% from the year-ago period.
The consensus EPS estimate is negative for its fiscal 2022 ending December 31, 2022. It missed Street EPS estimates in three of the trailing four quarters. The company’s EPS is expected to decline at a rate of 210.5% per annum over the next five years.
Its trailing-12-month ROTC and ROA have been negative compared to their positive industry averages. The stock has lost 88.6% year-to-date and 3.9% over the past week to close the last trading session at $26.36, down 93% from its 52-week high of $26.36.
CVNA’s POWR Ratings are consistent with this bleak outlook. The stock has an overall F rating, which equates to a Strong Sell in our proprietary rating system.
The stock has an F grade for Growth, Stability, Sentiment, and Quality. In addition to the POWR Ratings grades we have just highlighted, one can see the ratings for CVNA’s Momentum and Value here. CVNA is ranked #64 of 65 stocks in the F-rated Internet industry.
fuboTV Inc. (FUBO)
FUBO operates a live TV streaming platform for live sports, news, and entertainment content internationally. Its fuboTV platform allows customers to access content through streaming devices, as well as on SmartTVs, computers, mobile phones, and tablets. It has a 3.66 beta.
On June 13, 2022, FUBO announced the launch of TMB’s (Trusted Media Brands) award-winning free ad-supported streaming TV (FAST) channels. This is in sync with FUBO’s strategy to further grow its content offerings and ad revenue through the expanded distribution of FAST channels on its subscription service.
For its fiscal 2022 first quarter ended March 31, 2022, FUBO’s operating loss came in at $135.24 million, up 107.8% from the year-ago period. The company’s adjusted net loss came in at $107.92 million for the quarter, representing a 122.2% year-over-year rise. Its adjusted loss per share decreased 68.3% to $0.69 from the prior-year period. As of March 31, 2022, it had $450.92 million in cash and cash equivalents.
Analysts expect the company’s EPS to be negative for fiscal 2022 ending December 31, 2022. It missed Street EPS estimates in each of the trailing four quarters.
Its trailing-12-month ROTC and ROA have been negative compared to their positive industry averages. The stock has lost 84% year-to-date and 3.1% over the past week to close the last trading session at $2.48, down 92.9% from its 52-week high of $2.48.
FUBO’s POWR Ratings reflect this bleak outlook. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system.
The stock has an F grade for Sentiment, Quality, and Stability and a D for Growth and Momentum. Click here to see the additional ratings for FUBO’s Value. FUBO is rated last in the F-rated Entertainment - Sports & Theme Parks industry.
BA shares were trading at $158.97 per share on Thursday afternoon, up $2.88 (+1.85%). Year-to-date, BA has declined -21.04%, versus a -13.82% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.
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