Wall Street’s bearish price targets for the stocks in this article signal serious concerns. Such forecasts are uncommon in an industry where maintaining cordial corporate relationships often trumps delivering the hard truth.
At StockStory, we look beyond the headlines with our independent analysis to determine whether these bearish calls are justified. That said, here are two stocks poised to prove Wall Street wrong and one where the outlook is warranted.
One Stock to Sell:
Navient (NAVI)
Consensus Price Target: $9.06 (8.9% implied return)
Spun off from Sallie Mae in 2014 to handle the company's loan servicing and collection operations, Navient (NASDAQ: NAVI) provides education loan servicing and business processing solutions that help manage federal student loans, private education loans, and government services.
Why Do We Avoid NAVI?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 21.3% annually over the last five years
- Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term
Navient is trading at $8.32 per share, or 11.4x forward P/E. Read our free research report to see why you should think twice about including NAVI in your portfolio.
Two Stocks to Watch:
Brinker International (EAT)
Consensus Price Target: $198.67 (-6% implied return)
Founded by Norman Brinker in Dallas, Brinker International (NYSE: EAT) is a casual restaurant chain that operates the Chili’s, Maggiano’s Little Italy, and It’s Just Wings banners.
Why Could EAT Be a Winner?
- Same-store sales growth averaged 15.5% over the past two years, showing it’s bringing new and repeat diners into its restaurants
- Economies of scale give it some operating leverage when demand rises
- ROIC punches in at 15.6%, illustrating management’s expertise in identifying profitable investments, and its returns are climbing as it finds even more attractive growth opportunities
At $211.24 per share, Brinker International trades at 18x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
Korn Ferry (KFY)
Consensus Price Target: $81 (-1.5% implied return)
With clients including 97% of the S&P 100 and operations in 103 offices across 51 countries, Korn Ferry (NYSE: KFY) is a global consulting firm that helps organizations design optimal structures, recruit talent, develop leaders, and create effective compensation strategies.
Why Are We Positive on KFY?
- Impressive 10.1% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Earnings per share have massively outperformed its peers over the last two years, increasing by 26.9% annually
- Industry-leading 19% return on capital demonstrates management’s skill in finding high-return investments
Korn Ferry’s stock price of $82.27 implies a valuation ratio of 14.2x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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