When Wall Street turns bearish on a stock, it’s worth paying attention. These calls stand out because analysts rarely issue grim ratings on companies for fear their firms will lose out in other business lines such as 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 is one stock where you should be greedy instead of fearful and two where the skepticism is well-placed.
Two Stocks to Sell:
Scorpio Tankers (STNG)
Consensus Price Target: $80.38 (13.8% implied return)
Operating one of the youngest fleets in the industry, Scorpio Tankers (NYSE: STNG) is an international provider of marine transportation services, specializing in the shipment of refined petroleum.
Why Do We Think Twice About STNG?
- Sluggish trends in its total vessels suggest customers aren’t adopting its solutions as quickly as the company hoped
- Projected sales decline of 1.5% over the next 12 months indicates demand will continue deteriorating
- Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
At $70.62 per share, Scorpio Tankers trades at 12x forward P/E. Read our free research report to see why you should think twice about including STNG in your portfolio.
Diebold Nixdorf (DBD)
Consensus Price Target: $96.67 (20.2% implied return)
With roots dating back to 1859 and a presence in over 100 countries, Diebold Nixdorf (NYSE:DBD) provides automated self-service technology, software, and services that help banks and retailers digitize their customer transactions.
Why Are We Out on DBD?
- Sales were flat over the last five years, indicating it’s failed to expand this cycle
- Cash burn makes us question whether it can achieve sustainable long-term growth
- Diminishing returns on capital suggest its earlier profit pools are drying up
Diebold Nixdorf’s stock price of $80.45 implies a valuation ratio of 14.6x forward P/E. Check out our free in-depth research report to learn more about why DBD doesn’t pass our bar.
One Stock to Watch:
German American Bancorp (GABC)
Consensus Price Target: $47 (8.8% implied return)
Founded in 1910 during a wave of community banking expansion in the Midwest, German American Bancorp (NASDAQ:GABC) is a financial holding company that provides banking, wealth management, and insurance services across southern Indiana and Kentucky.
Why Do We Like GABC?
- Unique value proposition resonates with borrowers, as seen in its above-market 13.6% annual net interest income growth over the last five years
- Net interest margin increased by 38.7 basis points (100 basis points = 1 percentage point) over the last two years, giving the firm more capital to invest or return to shareholders
- Stellar return on equity showcases management’s ability to surface highly profitable business ventures
German American Bancorp is trading at $43.19 per share, or 1.3x forward P/B. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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