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Bear Of The Day: Hamilton Beach Brands (HBB)

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Hamilton Beach Brands (HBB - Free Report) is a Zacks Rank #5 (Strong Sell) and it is the Bear of the Day today.  Let's take a look at why this stock has the lowest Zacks Rank and if investors should dig a little deeper into this name.

Description

Hamilton Beach Brands sellssmall electric household and specialty housewares appliances. It offers air fryers, blenders, coffee makers, food processors, indoor electric grills, irons, juicers, mixers, slow cookers, toasters, and toaster ovens. T Hamilton Beach Brands Holding Company was founded in 1904 and is headquartered in Glen Allen, Virginia.

Earnings HIstory

When I take a look at the last four reports, I don't like what I see.  The company has missed the Zacks Consensus Estimate in each of the last four quarters.  

On the bright side, the negative earnings surprise is headed the right way onver the last three quarters.  

Those negative surprises went from -333% to -71% to -1.4%.  That is a move in the right direction, but those are still pretty big misses.

Recent Earnings

The most recent earnings report came on February 26 and the stock has sold off since that time.  There has been a market wide decline on Covid19 fears, but the miss didn't help things either.

I see the company reporting earnings of $1.43 when $1.45 was expected.  That two cent miss translated into a negative earnings surprise of 1.4%.

Estimate Movement

As a result of the miss, estimates have moved lower.  There really wan't that much movement, but there was enough to move the Zacks Rank to the lowest level.  I see the full year 2020 numbers moving from $1.90 to $1.85.  

The current quarter and the next quarter are holding still at $0.09 and $0.18 respectively.

Valuation

I see a really good valuation on this stock, with a 6x forward earnings multiple.  The price to book of 2.8x is less than the 3x that is a general cut off for value investors as well.  Problem here is the sales growth, which was -14% on a year over year basis last quarter and a price to sales multiple of 0.23x which tells me that the market doesn't reward the stock for incremental sales the same as it would if ther price to sales was 1.0x or more.

Net Margin has slipped from 2.78 to 1.8 to -0.53 over the last three quarters, so until that turns around investors might want to look elsewhere for an electronics play.

Chart

 

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