Wall Street is overwhelmingly bullish on the stocks in this article, with price targets suggesting significant upside potential. However, it’s worth remembering that analysts rarely issue sell ratings, partly because their firms often seek other business from the same companies they cover.

Unlike the investment banks, we created StockStory to provide independent analysis that helps you determine which companies are truly worth following. That said, here are three stocks where Wall Street may be overlooking some important risks and some alternatives with better fundamentals.

Movado (MOV)

Consensus Price Target: $31.50 (75.6% implied return)

With its watches displayed in 20 museums around the world, Movado (NYSE: MOV) is a watchmaking company with a portfolio of watch brands and accessories.

Why Are We Out on MOV?

1. Sales tumbled by 4.3% annually over the last two years, showing consumer trends are working against its favor
2. Estimated sales growth of 1.2% for the next 12 months is soft and implies weaker demand
3. Eroding returns on capital suggest its historical profit centers are aging

At $17.94 per share, Movado trades at 0.6x forward price-to-sales. Read our free research report to see why you should think twice about including MOV in your portfolio.

E.W. Scripps (SSP)

Consensus Price Target: $5.63 (160% implied return)

Founded as a chain of daily newspapers, E.W. Scripps (NASDAQ: SSP) is a diversified media enterprise operating a range of local television stations, national networks, and digital media platforms.

Why Do We Think SSP Will Underperform?

1. Sales stagnated over the last two years and signal the need for new growth strategies
2. Underwhelming 3.5% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its decreasing returns suggest its historical profit centers are aging
3. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions

E.W. Scripps’s stock price of $2.17 implies a valuation ratio of 0.6x forward EV-to-EBITDA. If you’re considering SSP for your portfolio, see our FREE research report to learn more.

Dentsply Sirona (XRAY)

Consensus Price Target: $16.29 (31.6% implied return)

With roots dating back to 1877 when it introduced the first dental electric drill, Dentsply Sirona (NASDAQ: XRAY) manufactures and sells professional dental equipment, technologies, and consumable products used by dentists and specialists worldwide.

Why Is XRAY Risky?

1. Constant currency revenue growth has disappointed over the past two years and shows demand was soft
2. Push for growth has led to negative returns on capital, signaling value destruction, and its shrinking returns suggest its past profit sources are losing steam
3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

Dentsply Sirona is trading at $12.37 per share, or 6.5x forward P/E. Check out our free in-depth research report to learn more about why XRAY doesn’t pass our bar.

High-Quality Stocks for All Market Conditions

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