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Bear of the Day: Meritor (MTOR)

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The market has surged off the COVID lows. There are countless stocks up over 50% since then, with many doubling. In an environment like this, you may feel like stocks only go up. Well, while a broad market rally can bring several stocks along for the ride, when the music stops, stocks with the strongest earnings will be the ones that stand the test of time. One way to uncover stocks with strong earnings trends is to lean on the time-teste strength of the Zacks Rank. Stocks with negative Zacks Ranks have earnings trends that are moving in the wrong direction.

Today’s Bear of the Day is a stock that has seen earnings estimates cut recently. I’m talking about Zacks Rank #5 (Strong Sell) Meritor (MTOR - Free Report) . Meritor, Inc. designs, develops, manufactures, markets, distributes, sells, services, and supports integrated systems, modules, and components to original equipment manufacturers (OEMs) and the aftermarket for the commercial vehicle, transportation, and industrial sectors. It operates through two segments, Commercial Truck; and Aftermarket, Industrial and Trailer. 

Analysts have been cutting earnings estimates for the current year and next year. The bearish moves have dropped the Zacks Consensus Estimate for the current year from $1.32 ninety days ago, to 86 cents today. Next year’s number has been slashed from ‘$2.38 to $1.71. That current year consensus number would represent an earnings contraction of 77.5%. Current quarter estimates are calling for a 52-cent loss, while next quarter the company is still forecast to lose another 6 cents.

The Automotive – Original Equipment industry sits in the Top 41% of our Zacks Industry Rank. There are a handful of stocks in this industry which are Zacks Rank #1 (Strong Buy) stocks. Among them are Garret Motion (GTX - Free Report) and LCI Industries (LCII - Free Report) .

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