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.
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.
CSX (CSX)
Consensus Price Target: $46.16 (-5.5% implied return)
Established as part of the Chessie System and Seaboard Coast Line Industries merger, CSX (NASDAQ: CSX) is a transportation company specializing in freight rail services.
Why Do We Pass on CSX?
- Flat unit sales over the past two years suggest it might have to lower prices to accelerate growth
- Earnings per share decreased by more than its revenue over the last two years, showing each sale was less profitable
- Free cash flow margin shrank by 15.3 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
CSX is trading at $48.86 per share, or 24.9x forward P/E. If you’re considering CSX for your portfolio, see our FREE research report to learn more.
Globe Life (GL)
Consensus Price Target: $175.91 (-0.6% implied return)
With roots dating back to 1900 and a rebranding from Torchmark Corporation in 2019, Globe Life (NYSE: GL) is an insurance holding company that offers life insurance, supplemental health insurance, and annuity products through various distribution channels.
Why Are We Hesitant About GL?
- Annual revenue growth of 4.5% over the last two years was below our standards for the insurance sector
- 4.9% annualized net premiums earned growth over the last two years lagged behind its insurance peers
- Flat book value per share over the last five years suggests it must find different ways to enhance shareholder value during this cycle
Globe Life’s stock price of $177.02 implies a valuation ratio of 2.1x forward P/B. Dive into our free research report to see why there are better opportunities than GL.
NBT Bancorp (NBTB)
Consensus Price Target: $48.92 (-2.3% implied return)
Tracing its roots back to 1856 when it first opened its doors in Norwich, New York, NBT Bancorp (NASDAQ: NBTB) is a community-oriented financial institution providing banking, wealth management, and insurance services to individuals and businesses across the northeastern United States.
Why Are We Wary of NBTB?
- Annual revenue growth of 9.4% over the last five years was below our standards for the banking sector
- Performance over the past five years shows its incremental sales were less profitable, as its 4.8% annual earnings per share growth trailed its revenue gains
- Anticipated tangible book value per share growth of 11.1% for the next year implies profitability will be modest
At $50.08 per share, NBT Bancorp trades at 1.3x forward P/B. Read our free research report to see why you should think twice about including NBTB in your portfolio.
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