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Bear Of The Day: Encore Wire Corp (WIRE)

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Encore Wire Corp (WIRE - Free Report) is a Zacks Rank #5 (Strong Sell) and it is the Bear of the Day today.  But the stock looks like it is moving higher.  This article is going to try to explain why a stock can have a low Zacks Rank and still move higher.

Description

Encore Wire Corporation is a low-cost manufacturer of copper electrical building wire and cable. The Company is a significant supplier of both residential wire for interior electrical wiring in homes, apartments and manufactured housing, as well as building wire for electrical distribution in commercial and industrial buildings.

Earning History

The Zacks website only has data for three of the last four quarters and over that time horizon I see two misses and one beat.  Not great, but certainly not the worst I have ever seen.

Estimates

The Zacks Rank looks at the movement of earnings estimates and when they fall so does the Zacks Rank.  60 days ago the Zacks Consensus Estimate for WIRE was at $3.00 for the full year, but now its down to $2.93.  

That isn't what you want to see, but it is even worse for 2021.  I see that number moving from $3.30 to $2.30 over the same time period and that is why the stock is at the lowest Zacks Rank.

Valuation

I see an 18x forward earnings multiple, which isnt that bad.  The price to book multiple of 1.4x is also rather low... but the topline contraction isn't something that excites me either.  

Chart

 

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Encore Wire Corporation (WIRE) - free report >>