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Fed rate hikes are expected to come to a halt soon, but fundamentally weak stock Norwegian Cruise Line Holdings (NCLH), First Majestic Silver, given looming recession fears driven by macroeconomic headwinds (AG), and it might be wise to avoid the desktop. It became metal (DM). Keep reading…
Fed rate hikes may stall after May’s FOMC meeting, but the knock-on effects of very high inflation and banking sector jitters could be felt in the coming months.
Given the current cloud of market volatility, an immediate resolution is unlikely, so Norwegian Cruise Line Holdings Ltd (NCLH), First Majestic Silver Corporation (AG), and Desktop Metal Co., Ltd. (DM), with stretched evaluation, may now be avoided.
Stubbornly high inflation, easing to 5% in March 2023, was attributed to the Fed’s continued efforts to raise rates. With inflation well above the central bank’s target interest rate of 2%, Expect rate hike of 1/4 point.
In addition to rising interest rates, the banking crisis caused Ripple effect in the economy. The resulting credit crunch is Economic growth slows, which could accelerate the path to recession.
moreover, According to advance estimates by the Bureau of Economic Analysis, the U.S. economy will 1.1% annual pace in the first quarter of 2023 Slower than consensus prediction. The result raises new concerns about a recession.
Oren Crackkin, chief US economist at Oxford Economics, said: “Growth risks are clear. Disadvantage The dynamics that boosted activity in early 2023 could falter, and the crisis from tighter credit conditions could be more severe than we had already factored into our forecasts. ”
In addition, the conference committee leading economic index For USA Decreased for 12 consecutive months in Marchindicating that the recession is set to hit in full in mid-2023.
Amid these headwinds and future market volatility, fundamentally weak stocks NCLH, AG and DM have poor growth prospects and can be avoided for now.
Norwegian Cruise Line Holdings Ltd. (NCLH)
NCLH is a global cruise company that operates the Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises brands. With about 28 ships and a total capacity she has 59,150 berths. The company markets its products through meetings, incentives, and charters, as well as retail/travel advisor and onboard cruise sales channels.
The last 12 months gross margin of 11.91% is 66.1% lower than the industry average of 35.11%.Also, its trailing 12 months eggROTC, and ROTA are negative 181.50%, 6.49%, and 12.23%, respectively, compared to industry averages of 11.79%, 6.34%, and 3.89%.
NCLH’s forward EV/sales of 2.18x is 98% higher than the industry average of 1.10x. The future EV/EBIT multiple is 17.97, 42.6% higher than the industry average of 12.60.
In the fourth quarter ended December 31, 2022, NCLH’s total cruise operating expenses increased 69.9% year-over-year to $1.22 billion. Adjusted net loss and net loss per share were $439.75 million and $1.04, respectively. As of December 31, 2022, NCLH had liquid assets of $1.87 billion and as of December 31, 2021, $3.30 billion.
Analysts expect NCLH’s EPS to be $0.74 for the fiscal year ending December 2023. Revenue for the year is expected to be $8.5 billion. The company also failed to beat consensus EPS forecasts in three of his four quarters, which is disappointing.
The stock has plunged 37.4% over the past year and 14.5% over the past three months to close its final trading session at $12.83.
of NCLH POWR rating It reflects this bleak outlook. The stock has an overall D rating, equivalent to sell in our proprietary rating system. POWR Ratings evaluate stocks by 118 different factors, each with its own weighting.
It has an F grade for stability and sentiment, and a D grade for quality. NCLH ranks last among four F-rated stocks. Travel – Cruise industry.
In addition to the POWR rating above, we also assess NCLH’s growth, value and momentum.Get All NCLH Ratings here.
First Majestic Silver (AG)
Headquartered in Vancouver, Canada, AG is engaged in the acquisition, exploration, development and production of mineral properties, with a focus on silver and gold production in Mexico and the United States. The company owns and operates the San Dimas Silver/Gold Mine, the Jerrit Canyon Gold Mine, the Santa Elena Silver/Gold Mine and the La Encantada Silver Mine.
AG’s gross margin of 22.52% over the last 12 months is 23.6% lower than the industry average of 29.47%. The trailing 12-month leveraged FCF margin was -25.62%, compared to the industry average of 4.25%.
AG’s forward EV/sales of 2.87x is 95.4% higher than the industry average of 1.47x. The future EV/EBITDA multiple was 16.58, 125.4% above the industry average of 7.36.
AG announced on March 20 that it had temporarily suspended all activities. Jerritt Canyon, which accounted for about 21% of the company’s 2022 revenue, will reduce overall costs.
Despite efforts to increase underground mining rates since the acquisition of Nevada’s Jerrit Canyon gold mine, mining rates have remained below this threshold and cash costs per ounce have remained higher than expected. .
AG’s revenue for the fourth quarter of the fiscal year ended December 31, 2022 decreased 27.7% year-on-year to $148.19 million. The company’s mining operating loss was $13.27 million and its mining operating profit was $40.36 million in the same period last year.
The quarter’s net loss also increased 323.5% year-over-year to $16.82 million. His loss per share was $0.06, marking a 200% increase over the previous year.
For the second quarter ending June 2023, EPS is expected to decline 50% year-over-year to $0.01.
Over the past year, the stock has fallen 32.1% to close the last trading session at $7.06. It has decreased by 11.3% over the last three months.
It’s no surprise that AG’s overall rating is an F. This translates into a strong sell in the POWR rating system.
Stocks also have an F grade for growth and a D grade for value, momentum, stability, sentiment, and quality. It ranks at the end of the F rating of 11 stocks. Minor – Silver industry.
click here View AG’s POWR rating.
Desktop Metal Co., Ltd. (DM)
DM manufactures and sells additive manufacturing solutions to engineers, designers and manufacturers in the Americas, Europe, Middle East, Africa and Asia Pacific.
The future EV/sales multiple of 2.76 is 79.9% higher than the industry average of 1.53. In terms of futures price/sales, DM is trading at 2.96x, 135.5% higher than the industry average of 1.26x.
DM’s 12-month ROCE, ROTC, and ROTA are negative 83.38%, 13.74%, and 98.14%, respectively, compared to industry averages of 14.17%, 7.03%, and 5.23%. Twelve-month EBIT margin of -101.61% compared to the industry average of 9.62%.
DM’s non-GAAP operating expenses increased 33.1% from the prior year to $177.63 million for the year ended December 31, 2022. Operating loss rose 263.2% year-on-year to his $731.76 million. The company’s non-GAAP net loss was $130.71 million and a loss of $2.35 per share, up 78.2% and 155.4% year-over-year, respectively.
DM’s total liquid assets were $336.42 million for the year ended December 31, 2022, compared with $402.01 million for the year ended December 31, 2021.
Analysts expect DM’s revenue to decline 2.9% year-over-year to $55.99 million in the second quarter ending June 2023. EPS for the quarter is expected to be minus $0.05.
DM’s stock is down 37.9% over the past year and 10.6% over the past six months, closing its last trading session at $2.20.
DM’s POWR rating reflects this challenging outlook. The stock has an overall rating of F, which equates to a strong sell in our proprietary rating system.
DM has F grades for stability, sentiment, and quality, and D grades for value. Within F-Rating Technology – 3D printing Ranked lowest among 6 brands in the industry.
To see additional POWR growth and DM momentum, click here.
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NCLH shares traded at $13.19 per share Friday morning, up $0.36 (+2.81%). Year-to-date, the NCLH is up his 7.76%, while the benchmark S&P 500 index is up his 8.76% over the same period.
About the Author: Srithi Suman Jayaswar
As a student, he became interested in stock market dynamics and became a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy. With her master’s degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.
post Sell: 3 Worst Value Stocks to Avoid in Current Markets first appeared StockNews.com