Wall Street’s bearish price targets for the stocks in this article signal serious concerns. Such forecasts are uncommon in an industry where maintaining cordial corporate relationships often trumps delivering the hard truth.
At StockStory, we look beyond the headlines with our independent analysis to determine whether these bearish calls are justified. Keeping that in mind, here are three stocks where the outlook is warranted and some alternatives with better fundamentals.
Crocs (CROX)
Consensus Price Target: $90.92 (5.1% implied return)
Founded in 2002, Crocs (NASDAQ: CROX) sells casual footwear and is known for its iconic clog shoe.
Why Does CROX Give Us Pause?
- Underwhelming constant currency revenue performance over the past two years suggests its product offering at current prices doesn’t resonate with customers
- Forecasted revenue decline of 4% for the upcoming 12 months implies demand will fall off a cliff
- Diminishing returns on capital suggest its earlier profit pools are drying up
At $86.49 per share, Crocs trades at 6.8x forward P/E. Check out our free in-depth research report to learn more about why CROX doesn’t pass our bar.
Acushnet (GOLF)
Consensus Price Target: $75.86 (-2.8% implied return)
Producer of the acclaimed Titleist Pro V1 golf ball, Acushnet (NYSE: GOLF) is a design and manufacturing company specializing in performance-driven golf products.
Why Is GOLF Not Exciting?
- 2.2% annual revenue growth over the last two years was slower than its consumer discretionary peers
- Projected sales growth of 1.1% for the next 12 months suggests sluggish demand
- Waning returns on capital imply its previous profit engines are losing steam
Acushnet is trading at $78.02 per share, or 20.8x forward P/E. To fully understand why you should be careful with GOLF, check out our full research report (it’s free).
KB Home (KBH)
Consensus Price Target: $62.75 (-0.4% implied return)
The first homebuilder to be listed on the NYSE, KB Home (NYSE: KB) is a homebuilding company targeting the first-time home buyer and move-up buyer markets.
Why Do We Steer Clear of KBH?
- Sales pipeline suggests its future revenue growth won’t meet our standards as its backlog averaged 20.8% declines over the past two years
- Projected sales decline of 10.4% over the next 12 months indicates demand will continue deteriorating
- Earnings per share decreased by more than its revenue over the last two years, showing each sale was less profitable
KB Home’s stock price of $63 implies a valuation ratio of 9.1x forward P/E. Read our free research report to see why you should think twice about including KBH in your portfolio.
High-Quality Stocks for All Market Conditions
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