Wall Street has issued downbeat forecasts for the stocks in this article. These predictions are rare - financial institutions typically hesitate to say bad things about a company because it can jeopardize their other revenue-generating business lines like M&A advisory.
Whatever the consensus opinion may be, our team at StockStory cuts through the noise by conducting independent analysis to determine a company’s long-term prospects. That said, here are three stocks where the skepticism is well-placed and some better opportunities to consider.
eXp World (EXPI)
Consensus Price Target: $12 (11.7% implied return)
Founded in 2009, eXp World (NASDAQ:EXPI) is a real estate company known for its virtual, cloud-based approach to real estate brokerage.
Why Are We Out on EXPI?
- Number of transactions has disappointed over the past two years, indicating weak demand for its offerings
- Poor expense management has led to an operating margin of -0.5% that is below the industry average
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 12.2% annually while its revenue grew
eXp World is trading at $10.74 per share, or 23.1x forward EV-to-EBITDA. If you’re considering EXPI for your portfolio, see our FREE research report to learn more.
General Motors (GM)
Consensus Price Target: $57.20 (-1.5% implied return)
Founded in 1908 by William C. Durant, General Motors (NYSE:GM) offers a range of vehicles and automobiles through brands such as Chevrolet, Buick, GMC, and Cadillac.
Why Does GM Give Us Pause?
- Disappointing unit sales over the past two years indicate demand is soft and that the company may need to revise its strategy
- 7.9 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
- High net-debt-to-EBITDA ratio of 5× could force the company to raise capital at unfavorable terms if market conditions deteriorate
General Motors’s stock price of $58.10 implies a valuation ratio of 6.4x forward P/E. Check out our free in-depth research report to learn more about why GM doesn’t pass our bar.
Bank of Hawaii (BOH)
Consensus Price Target: $70.50 (5.3% implied return)
Founded in 1897 as a financial anchor for the newly annexed Hawaiian territory, Bank of Hawaii (NYSE:BOH) is a financial institution providing banking, investment, and insurance services primarily to customers in Hawaii, Guam, and other Pacific Islands.
Why Does BOH Fall Short?
- Net interest income stagnated over the last five years and signal the need for new growth strategies
- Weak unit economics are reflected in its net interest margin of 2.2%, one of the worst among bank companies
- Sales were less profitable over the last two years as its earnings per share fell by 15.3% annually, worse than its revenue declines
At $66.93 per share, Bank of Hawaii trades at 1.8x forward P/B. To fully understand why you should be careful with BOH, check out our full research report (it’s free).
Stocks We Like More
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