Yahoo Finance Here's Why You Should Avoid Betting on Cimpress (CMPR) Stock
Cimpress plc CMPR has failed to impress investors with its recent operational performance due to a low demand environment across its products, rising operating costs and expenses and other challenges, which are likely to adversely impact its earnings in the near term.
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This Zacks Rank #5 (Strong Sell) company has a market capitalization of $977.4 million. In the past six months, it has lost 47.2% compared with the industry’s decline of 18.8%.
Let’s discuss the factors that might continue to take a toll on the firm.
Low Demand Environment: A low demand environment across Cimpress’ pandemic-related products business has been affecting its performance of late. A decrease in demand for its products like home decor and face masks is expected to affect its top-line performance in the upcoming quarters.
High Costs and Expenses: Cimpress has been dealing with the adverse impacts of increasing cost of sales and operating expenses. In third-quarter fiscal 2022 (ended March 2022), its cost of sales increased 17.2% year over year to $347.5 million, representing 52.9% of net sales. Also, its general and administrative expenses remained high at $245.5 million, representing 37.3% of net sales. Supply chain constraints and raw-material inflation were spoilsports in the quarter. These adversities are expected to persist in the near term too.
High Debt Level: Cimpress’ highly leveraged balance sheet also remains concerning. Its long-term debt was $1,699.4 million at the end of third-quarter fiscal 2022. CMPR’s cash and cash equivalents (exiting the fiscal third quarter) of $161.5 million does not seem impressive considering its high debt profile.
Forex Woes: Given its widespread presence in international markets, CMPR is exposed to unfavorable foreign currency movements. For instance, in the fiscal third quarter, foreign exchange headwinds had an adverse impact of 400 basis points on the year-over-year reported revenue growth rate. A stronger U.S. dollar might depress the company's overseas business results in the quarters ahead.
Estimate Trend: In the past 60 days, the Zacks Consensus Estimate for CMPR’s fiscal 2022 (ending June 2022) earnings has declined from earnings of $1.23 to a loss of $1.69 on two downward estimate revisions against none upward. Over the same timeframe, the consensus estimate for fiscal 2023 (ending June 2023) earnings has decreased from $2.11 to 55 cents on two downward estimate revisions against none upward.
Stocks to Consider
Some better-ranked companies from the Consumer Discretionary sector are discussed below.
The Aaron's Company, Inc. AAN presently sports a Zacks Rank #1 (Strong Buy). AAN delivered a trailing four-quarter earnings surprise of 52.7%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings estimates for AAN have increased 5.8% for 2022 in the past 60 days. Its shares have lost 27.7% in the past six months.
A-Mark Precious Metals, Inc. AMRK presently has a Zacks Rank #1. It delivered a four-quarter average earnings surprise of 82%.
In the past 60 days, earnings estimates for AMRK have increased 34% for fiscal 2022 (ending June 2022). The stock has rallied 1.8% in the past six months.
Caleres, Inc. CAL is presently Zacks #1 Ranked. It delivered a four-quarter average earnings surprise of 62.9%.
In the past 60 days, Caleres’ earnings estimates have increased 11.3% for fiscal 2022 (ending January 2023). The same has increased 20.7% in the past six months.
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