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Yahoo
14 hours ago
- Business
- Yahoo
3 Reasons to Avoid UCB and 1 Stock to Buy Instead
Over the past six months, United Community Banks's stock price fell to $27.79. Shareholders have lost 10.5% of their capital, which is disappointing considering the S&P 500 has climbed by 1.9%. This may have investors wondering how to approach the situation. Is there a buying opportunity in United Community Banks, or does it present a risk to your portfolio? Dive into our full research report to see our analyst team's opinion, it's free. Even with the cheaper entry price, we're swiping left on United Community Banks for now. Here are three reasons why there are better opportunities than UCB and a stock we'd rather own. We at StockStory place the most emphasis on long-term growth, but within financials, a stretched historical view may miss recent interest rate changes, market returns, and industry trends. United Community Banks's recent performance shows its demand has slowed significantly as its annualized revenue growth of 1.8% over the last two years was well below its five-year trend. Net interest margin represents how much a bank earns in relation to its outstanding loans. It's one of the most important metrics to track because it shows how a bank's loans are performing and whether it has the ability to command higher premiums for its services. Over the past two years, we can see that United Community Banks's net interest margin averaged a subpar 3.3%. This metric is well below other banks, signaling its loans aren't very profitable. Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions. United Community Banks's EPS grew at an unimpressive 1.1% compounded annual growth rate over the last five years, lower than its 10.6% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded. United Community Banks's business quality ultimately falls short of our standards. Following the recent decline, the stock trades at 0.9× forward P/B (or $27.79 per share). This valuation tells us it's a bit of a market darling with a lot of good news priced in - you can find more timely opportunities elsewhere. Let us point you toward one of our top software and edge computing picks. The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025. While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today. Connectez-vous pour accéder à votre portefeuille
Yahoo
14 hours ago
- Business
- Yahoo
3 Reasons FRME is Risky and 1 Stock to Buy Instead
Over the past six months, First Merchants's stock price fell to $35.72. Shareholders have lost 11.5% of their capital, which is disappointing considering the S&P 500 has climbed by 1.9%. This was partly driven by its softer quarterly results and may have investors wondering how to approach the situation. Is there a buying opportunity in First Merchants, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it's free. Despite the more favorable entry price, we don't have much confidence in First Merchants. Here are three reasons why FRME doesn't excite us and a stock we'd rather own. We at StockStory place the most emphasis on long-term growth, but within financials, a stretched historical view may miss recent interest rate changes, market returns, and industry trends. First Merchants's recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 2% over the last two years. Net interest margin represents how much a bank earns in relation to its outstanding loans. It's one of the most important metrics to track because it shows how a bank's loans are performing and whether it has the ability to command higher premiums for its services. Over the past two years, First Merchants's net interest margin averaged 3.2%. Its margin also contracted by 26.7 basis points (100 basis points = 1 percentage point) over that period. This decline was a headwind for its net interest income. While prevailing rates are a major determinant of net interest margin changes over time, the decline could mean First Merchants either faced competition for loans and deposits or experienced a negative mix shift in its balance sheet composition. Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions. First Merchants's EPS grew at an unimpressive 1.9% compounded annual growth rate over the last five years, lower than its 7% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded. First Merchants isn't a terrible business, but it doesn't pass our bar. Following the recent decline, the stock trades at 0.8× forward P/B (or $35.72 per share). Beauty is in the eye of the beholder, but we don't really see a big opportunity at the moment. We're pretty confident there are more exciting stocks to buy at the moment. We'd suggest looking at a fast-growing restaurant franchise with an A+ ranch dressing sauce. Market indices reached historic highs following Donald Trump's presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth. While this has caused many investors to adopt a "fearful" wait-and-see approach, we're leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
Yahoo
2 days ago
- Business
- Yahoo
GMS (NYSE:GMS) Surprises With Q1 Sales
Building materials distributor GMS (NYSE:GMS) reported Q1 CY2025 results topping the market's revenue expectations , but sales fell by 5.6% year on year to $1.33 billion. Its non-GAAP profit of $1.29 per share was 15.9% above analysts' consensus estimates. Is now the time to buy GMS? Find out in our full research report. Revenue: $1.33 billion vs analyst estimates of $1.30 billion (5.6% year-on-year decline, 2.9% beat) Adjusted EPS: $1.29 vs analyst estimates of $1.11 (15.9% beat) Adjusted EBITDA: $109.8 million vs analyst estimates of $104.5 million (8.2% margin, 5.1% beat) Operating Margin: 4.5%, down from 7.1% in the same quarter last year Free Cash Flow Margin: 13.7%, similar to the same quarter last year Organic Revenue fell 9.7% year on year (5.5% in the same quarter last year) Market Capitalization: $2.81 billion 'We reported solid results for our fourth quarter and full year fiscal 2025 despite deterioration in end market conditions as we moved through the year,' said John C. Turner, Jr, President and Chief Executive Officer of GMS. Founded in 1971, GMS (NYSE:GMS) distributes specialty building materials including wallboard, ceilings, and insulation products, to the construction industry. Examining a company's long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, GMS grew its sales at an impressive 11.2% compounded annual growth rate. Its growth beat the average industrials company and shows its offerings resonate with customers. We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. GMS's recent performance shows its demand has slowed significantly as its annualized revenue growth of 1.7% over the last two years was well below its five-year trend. GMS also reports organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don't accurately reflect its fundamentals. Over the last two years, GMS's organic revenue averaged 2.4% year-on-year declines. Because this number is lower than its normal revenue growth, we can see that some mixture of acquisitions and foreign exchange rates boosted its headline results. This quarter, GMS's revenue fell by 5.6% year on year to $1.33 billion but beat Wall Street's estimates by 2.9%. Looking ahead, sell-side analysts expect revenue to decline by 1.2% over the next 12 months, a slight deceleration versus the last two years. This projection is underwhelming and implies its products and services will face some demand challenges. Today's young investors likely haven't read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next. GMS was profitable over the last five years but held back by its large cost base. Its average operating margin of 7.5% was weak for an industrials business. Analyzing the trend in its profitability, GMS's operating margin decreased by 1.1 percentage points over the last five years. This raises questions about the company's expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. GMS's performance was poor no matter how you look at it - it shows that costs were rising and it couldn't pass them onto its customers. This quarter, GMS generated an operating margin profit margin of 4.5%, down 2.6 percentage points year on year. Since GMS's operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased. We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company's growth is profitable. GMS's EPS grew at a spectacular 15.7% compounded annual growth rate over the last five years, higher than its 11.2% annualized revenue growth. However, this alone doesn't tell us much about its business quality because its operating margin didn't improve. We can take a deeper look into GMS's earnings quality to better understand the drivers of its performance. A five-year view shows that GMS has repurchased its stock, shrinking its share count by 8.5%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings. Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business. For GMS, its two-year annual EPS declines of 18.1% mark a reversal from its (seemingly) healthy five-year trend. We hope GMS can return to earnings growth in the future. In Q1, GMS reported EPS at $1.29, down from $2.01 in the same quarter last year. Despite falling year on year, this print easily cleared analysts' estimates. Over the next 12 months, Wall Street expects GMS's full-year EPS of $6.16 to stay about the same. We were impressed by how significantly GMS blew past analysts' organic revenue expectations this quarter. We were also glad its revenue outperformed Wall Street's estimates. Zooming out, we think this was a solid print. The stock remained flat at $73.50 immediately after reporting. Sure, GMS had a solid quarter, but if we look at the bigger picture, is this stock a buy? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it's free.
Yahoo
3 days ago
- Business
- Yahoo
La-Z-Boy (NYSE:LZB) Posts Better-Than-Expected Sales In Q1
Furniture company La-Z-Boy (NYSE:LZB) reported revenue ahead of Wall Street's expectations in Q1 CY2025, with sales up 3.1% year on year to $570.9 million. The company expects next quarter's revenue to be around $500 million, close to analysts' estimates. Its non-GAAP profit of $0.92 per share was 1.1% below analysts' consensus estimates. Is now the time to buy La-Z-Boy? Find out in our full research report. Revenue: $570.9 million vs analyst estimates of $558.6 million (3.1% year-on-year growth, 2.2% beat) Adjusted EPS: $0.92 vs analyst expectations of $0.93 (1.1% miss) Adjusted EBITDA: $41.17 million vs analyst estimates of $63.5 million (7.2% margin, 35.2% miss) Revenue Guidance for Q2 CY2025 is $500 million at the midpoint, roughly in line with what analysts were expecting Operating Margin: 5.2%, down from 9.1% in the same quarter last year Free Cash Flow Margin: 18.6%, up from 6.7% in the same quarter last year Market Capitalization: $1.61 billion The prized possession of every mancave, La-Z-Boy (NYSE:LZB) is a furniture company specializing in recliners, sofas, and seats. Reviewing a company's long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, La-Z-Boy grew its sales at a sluggish 4.4% compounded annual growth rate. This was below our standard for the consumer discretionary sector and is a tough starting point for our analysis. We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or trend. La-Z-Boy's performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 5.3% annually. We can better understand the company's revenue dynamics by analyzing its most important segments, Wholesale and Retail, which are 23.8% and 76.2% of core revenues. Over the last two years, La-Z-Boy's Wholesale revenue (sales to retailers) averaged 18.3% year-on-year declines while its Retail revenue (direct sales to consumers) averaged 15.7% declines. This quarter, La-Z-Boy reported modest year-on-year revenue growth of 3.1% but beat Wall Street's estimates by 2.2%. Company management is currently guiding for flat sales next quarter. Looking further ahead, sell-side analysts expect revenue to grow 2.2% over the next 12 months. While this projection suggests its newer products and services will catalyze better top-line performance, it is still below average for the sector. Unless you've been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) stock benefiting from the rise of AI. Click here to access our free report one of our favorites growth stories. Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals. La-Z-Boy's operating margin might fluctuated slightly over the last 12 months but has remained more or less the same, averaging 6.9% over the last two years. This profitability was paltry for a consumer discretionary business and caused by its suboptimal cost structure. In Q1, La-Z-Boy generated an operating margin profit margin of 5.2%, down 3.9 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue. Revenue trends explain a company's historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions. La-Z-Boy's EPS grew at an unimpressive 6.4% compounded annual growth rate over the last five years. On the bright side, this performance was better than its 4.4% annualized revenue growth and tells us the company became more profitable on a per-share basis as it expanded. In Q1, La-Z-Boy reported EPS at $0.92, down from $0.95 in the same quarter last year. This print slightly missed analysts' estimates. Over the next 12 months, Wall Street expects La-Z-Boy's full-year EPS of $2.93 to grow 12.1%. It was encouraging to see La-Z-Boy beat analysts' revenue expectations this quarter. On the other hand, its EPS and EBITDA fell short of Wall Street's estimates. Overall, this was a weaker quarter. The stock remained flat at $38.94 immediately after reporting. Is La-Z-Boy an attractive investment opportunity at the current price? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it's free. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
4 days ago
- Business
- Yahoo
3 Reasons to Sell PLUG and 1 Stock to Buy Instead
What a brutal six months it's been for Plug Power. The stock has dropped 47.4% and now trades at $1.29, rattling many shareholders. This was partly driven by its softer quarterly results and may have investors wondering how to approach the situation. Is now the time to buy Plug Power, or should you be careful about including it in your portfolio? See what our analysts have to say in our full research report, it's free. Even with the cheaper entry price, we're cautious about Plug Power. Here are three reasons why we avoid PLUG and a stock we'd rather own. We at StockStory place the most emphasis on long-term growth, but within industrials, a stretched historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Plug Power's recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 8.7% over the last two years. Plug Power isn't alone in its struggles as the Renewable Energy industry experienced a cyclical downturn, with many similar businesses observing lower sales at this time. Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king. As you can see below, Plug Power's margin dropped meaningfully over the last five years. It may have ticked higher more recently, but shareholders are likely hoping for its margin to at least revert to its historical level. Almost any movement in the wrong direction is undesirable because it's already burning cash. If the longer-term trend returns, it could signal it's in the middle of a big investment cycle. Plug Power's free cash flow margin for the trailing 12 months was negative 140%. As long-term investors, the risk we care about most is the permanent loss of capital, which can happen when a company goes bankrupt or raises money from a disadvantaged position. This is separate from short-term stock price volatility, something we are much less bothered by. Plug Power burned through $901.4 million of cash over the last year, and its $564 million of debt exceeds the $295.8 million of cash on its balance sheet. This is a deal breaker for us because indebted loss-making companies spell trouble. Unless the Plug Power's fundamentals change quickly, it might find itself in a position where it must raise capital from investors to continue operating. Whether that would be favorable is unclear because dilution is a headwind for shareholder returns. We remain cautious of Plug Power until it generates consistent free cash flow or any of its announced financing plans materialize on its balance sheet. Plug Power falls short of our quality standards. After the recent drawdown, the stock trades at $1.29 per share (or a forward price-to-sales ratio of 1.5×). The market typically values companies like Plug Power based on their anticipated profits for the next 12 months, but it expects the business to lose money. We also think the upside isn't great compared to the potential downside here - there are more exciting stocks to buy. We'd suggest looking at one of our top digital advertising picks. Market indices reached historic highs following Donald Trump's presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth. While this has caused many investors to adopt a "fearful" wait-and-see approach, we're leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
