Last week’s Federal Reserve interest rate increase has thrown cold water on investor sentiment. Furthermore, with continuing geopolitical tensions and COVID-related lockdowns in China, markets might continue to founder in the coming quarters. According to analysts at Deutsche Bank, the S&P 500 is projected to decline by 20% in 2023.
In addition, according to a recent UBS investor sentiment survey, 51% of respondents have opined that the market is more volatile than usual. So, amid widespread apprehension of a potential future recession, investors should now avoid fundamentally weak stocks.
Wall Street analysts expect J. M. Smucker Company (SJM), Kimberly-Clark Corporation (KMB), and Annaly Capital Management, Inc. (NLY) to plunge further in the near term.
J.M. Smucker Company (SJM)
SJM in Orrville, Ohio, manufactures and markets branded food and beverage products worldwide. It operates in four segments: U.S. Retail Coffee; U.S. Retail Consumer Foods; U.S. Retail Pet Foods; and International and Away from Home.
SJM’s net sales for the third quarter, ended Jan. 31, 2022, came in at $2.06 billion, compared to $2.08 billion in the prior-year period. Its gross profit was $683.10 million, down 15.6% year-over-year. Furthermore, its net income was $69.70 million, down 73.3% year-over-year, while its EPS decreased 72.4% year-over-year to $0.64.
Analysts expect SJM’s revenue to fall marginally in 2022. Its EPS is estimated to decline by 6.2% to $8.55 in 2022. The stock closed yesterday’s trading session at $142.50. Wall Street analysts expect the stock to hit $132.20 in the near term, which indicates a potential decline of 7.2%.
SJM’s POWR Ratings reflect its poor prospects. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
The stock has a D grade for Sentiment. Click here to access the additional POWR Ratings for SJM (Growth, Value, Momentum, Stability, and Quality). SJM is ranked #42 of 87 stocks in the Food Makers industry.
Kimberly-Clark Corporation (KMB)
KMB in Irving, Tex., and its subsidiaries manufacture and market personal care and consumer tissue products worldwide. It operates through three segments: Personal Care; Consumer Tissue; and K-C Professional.
KMB’s net sales increased 7.4% year-over-year to $5.09 billion for the first quarter, ended March 31, 2022. However, its gross profit came in at $1.52 billion, down 4.3% year-over-year. Also, its net income decreased 9.9% year-over-year to $535 million, while its EPS came in at $1.55, also down 9.9% year-over-year.
Analysts expect KMB’s EPS to decline by 6.3% to $5.79 in 2022. The stock missed its consensus EPS estimates in two of the four trailing quarters. The stock closed yesterday’s trading session at $138.95. Also, Wall Street analysts expect the stock to hit $132.30 in the near term, which indicates a potential decline of 4.8%.
KMB has a D grade for Sentiment. We have also rated it for Growth, Value, Momentum, Stability, and Quality. Click here to access all the KMB ratings. KMB is ranked #27 of 61 stocks in the D-rated Consumer Goods industry.
Annaly Capital Management, Inc. (NLY)
NLY engages in mortgage finance and corporate middle-market lending. The New York City-based firm invests in agency mortgage-backed securities; mortgage servicing rights; agency commercial mortgage-backed securities; non-agency residential mortgage assets; residential mortgage loans; credit risk transfer securities; corporate debts; and other commercial real estate investments.
NLY’s cash and cash equivalents came in at $955.84 million for the period ended March 31, 2022, compared to $1.34 billion for the period ended Dec. 31, 2021. Its total assets were $76.19 billion, compared to $76.76 billion, for the same period in the prior year. In addition, its total liabilities were $64.71 billion, compared to $63.57 billion, for the same period in the prior year.
Analysts expect NLY’s EPS to decrease 18.1% to $0.95 in 2022. Over the past year, the stock has declined 27.5% in price to close yesterday’s trading session at $6.62. Wall Street analysts expect the stock to hit $6.50 in the near term, which indicates a potential 1.8% decline.
NLY’s POWR Ratings are consistent with this bleak outlook. The stock has a D grade for Stability and Sentiment.
We also have graded NLY for Growth, Value, Momentum, and Quality. Click here to access all NLY’s ratings. NLY is ranked #10 of 31 stocks in the D-rated REITs - Mortgage industry.
SJM shares were trading at $144.09 per share on Wednesday afternoon, up $1.59 (+1.12%). Year-to-date, SJM has gained 6.86%, versus a -15.32% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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