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 skepticism is well-placed and some better opportunities to consider.
Carter's (CRI)
Consensus Price Target: $24.60 (-14.5% implied return)
Rumored to sell more than 10 products for every child born in the United States, Carter's (NYSE: CRI) is an American designer and marketer of children's apparel.
Why Do We Steer Clear of CRI?
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
- Estimated sales for the next 12 months are flat and imply a softer demand environment
- Waning returns on capital imply its previous profit engines are losing steam
At $28.76 per share, Carter's trades at 10.9x forward P/E. To fully understand why you should be careful with CRI, check out our full research report (it’s free).
Hilton (HLT)
Consensus Price Target: $273.50 (-0.9% implied return)
Founded in 1919, Hilton Worldwide (NYSE: HLT) is a global hospitality company with a portfolio of hotel brands.
Why Does HLT Give Us Pause?
- Sizable revenue base leads to growth challenges as its 8.4% annual revenue increases over the last two years fell short of other consumer discretionary companies
- Revenue per room has disappointed over the past two years due to weaker trends in its daily rates and occupancy levels
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 7.2%
Hilton is trading at $276.06 per share, or 33.1x forward P/E. Read our free research report to see why you should think twice about including HLT in your portfolio.
American Woodmark (AMWD)
Consensus Price Target: $70.33 (6.8% implied return)
Starting as a small millwork shop, American Woodmark (NASDAQ: AMWD) is a cabinet manufacturing company that helps customers from inspiration to installation.
Why Do We Avoid AMWD?
- Sales tumbled by 9.6% annually over the last two years, showing market trends are working against its favor during this cycle
- Sales are projected to tank by 3.1% over the next 12 months as its demand continues evaporating
- Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term
American Woodmark’s stock price of $65.86 implies a valuation ratio of 13x forward P/E. Check out our free in-depth research report to learn more about why AMWD doesn’t pass our bar.
High-Quality Stocks for All Market Conditions
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