Back to top

Image: Bigstock

Bear Of The Day: Ichor Holdings (ICHR)

Read MoreHide Full Article

Ichor Holdings (ICHR - Free Report) has slipped to a Zacks Rank #5 (Strong Sell) after it missed earnings back in early February.  The stock is right around the same price, but estimates have fallen in a meaningful way.  Since that hasn't really impacted the stock, it has moved the valuation metrics.

ICHR's last report had EPS at $0.32 but the Zacks Consensus Estimate was calling for $0.35.  That three cent miss translates into a 8.5% negative earnings surprise.  This was the only miss of the last 4 quarters, so its not like there has been a very poor earnings history.

Estimate Revisions

The key to the Zacks Rank is the revision to earnings estimates.  As the estimates fall, so does the Zacks Rank, and that is just what we have in the case of ICHR.

60 days ago, the Zacks Consensus Estimate for this quarter was $0.42, but that was slashed to the current level of $0.26.

The estimate for the next quarter fell from $0.57 to $0.33 over the same time period.

Full year 2019 estimates slipped from $2.45 to $1.80.  The Zacks Rank tends to weight the full year number more than the current quarterly numbers.  This is the main reason the Rank fell to the lowest level.

2020 estimates have also dropped, moving from $2.83 to $2.68.

Valuation

Normally I would be excited to see a stock at 12x forward earnings multiple for a tech stock like this would excite me.  Problem is, growth is contracting at 22% from last year.  The price to book multiple of 2.5x is good for value investors, while a 0.6x price to sales multiple isn't that great for growth investors.  Margins have been moving in the wrong direction, and until they turn around, this is a good stock to avoid.

Chart

Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.

This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.

See their latest picks free >>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Ichor Holdings, Ltd. (ICHR) - free report >>

Published in