The stock market has been under tremendous pressure since the beginning of 2022 due to the Fed’s continued aggressive rate hikes to tame inflation and the increasing possibility of an economic recession. Inflation is persistently hovering around its multi-decade high and shows no signs of slowing down. Analysts expect another outsized rate hike in November as the September CPI report came in hotter than expected.
The macroeconomic uncertainties are weighing on investors’ sentiment, and the market is experiencing a broad-based sell-off. According to JPMorgan Chase CEO Jamie Dimon, the S&P 500 could further fall significantly. He warned that a “very, very serious” mix of macro-economic headwinds could tip the global economy into a recession by mid-next year.
Given the backdrop, we think investors should steer clear of fundamentally weak stocks Payoneer Global Inc. (PAYO), ContextLogic Inc. (WISH), LL Flooring Holdings, Inc. (LL), and Mullen Automotive, Inc. (MULN), which have been declining in price lately.
Payoneer Global Inc. (PAYO)
PAYO is a cross-border payment and commerce-enabling platform that facilitates marketplaces, platforms, and online merchants worldwide. The company offers a wide range of services, including cross-border payments, tax solutions, working capital, merchant services, and risk management. It caters to digital businesses, online sellers, and freelancers to manage their international payments.
For the fiscal second quarter ended June 30, 2022, PAYO’s total operating expenses increased 16.3% year-over-year to $150.39 million. Its operating loss came in at $2.20 million. As of June 30, PAYO’s total liabilities stood at $5.30 billion, up 15.4% from December 31, 2021.
Street expects PAYO’s EPS to come in at negative $0.01 for the fiscal year ending December 2023. In terms of its forward EV/Sales, PAYO is currently trading at 3.51x, 40.2% higher than the industry average of 2.50x. Its forward Price/Sales multiple of 4.29 is 75.7% higher than the industry average of 2.44.
Over the past year, PAYO’s stock has slumped 12.8% in price. It closed its last trading session at $7.41.
PAYO’s POWR Ratings reflect this bleak outlook. The stock has an overall rating of D, equating to Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
PAYO also has a Value, Momentum, Growth, and Stability grade of D. In the F-rated 104-stock Financial Services (Enterprise) industry, PAYO is ranked #81.
Click here to see the additional POWR Ratings for PAYO (Quality and Sentiment).
ContextLogic Inc. (WISH)
WISH, an e-commerce company operates an e-commerce platform that connects users to merchants in Europe, North America, South America, and internationally. The company also provides marketplace and logistics services to its merchants.
WISH’s revenue decreased 79.6% year-over-year to $134 million in the second quarter ended June 30, 2022. Its gross profit declined 89.1% from the prior-year quarter to $42 million. The company reported an operating loss of $91 million, while its net loss came in at $90 million. In addition, its cash and cash equivalents came in at $693 million, representing a decline of 31.3% for the six months ended June 30, 2022.
The consensus EPS estimate of negative $0.17 indicates a 220.8% year-over-year decline for the quarter ended September 2022. Also, the consensus revenue estimate of 155.98 million represents a decline of 57.6% year-over-year in the same period.
WISH’s forward Price/Sales multiple of 0.71 is 13.9% lower than the industry average of 0.82. Its forward Price/Book multiple of 1.13 is 52.8% lower than the industry average of 2.40.
The company’s shares have plummeted 84.9% over the past year and 75.6% year-to-date to close its last trading session at $0.76.
WISH’s poor prospects are reflected in its POWR Ratings. The stock has an overall D rating, equating to Sell in our proprietary rating system.
WISH has an F grade for Stability and a D for Quality. Of the 63 stocks in the F-rated Internet industry, WISH is ranked #52.
Beyond what is stated above, you can view WISH ratings for Growth, Momentum, Value, and Sentiment here.
LL Flooring Holdings, Inc. (LL)
LL operates as a multi-channel specialty retailer of hard-surface flooring and its enhancements and accessories. The company offers various products, including hardwood species, waterproof vinyl plank, engineered hardwood, laminate, bamboo, porcelain tile, and others, under its brand names, Bellawood and Coreluxe. It also provides in-home delivery and installation services.
For the fiscal quarter ended June 30, 2022, LL’s total net sales decreased marginally year-over-year to $298.96 million. Operating income and net income stood at $4.66 million and $2.74 million, down 71.9% and 77.2% year-over-year, respectively. In the same period, the company’s EPS was $0.09, indicating a decline of 78% from the prior-year quarter.
Analysts expect LL’s EPS to decline 10.3% year-over-year to $0.26 for the fiscal quarter ended September 2022. Also, the company’s EPS is expected to come in at $0.75 for fiscal 2022, indicating a 46% year-over-year decline.
In terms of its forward EV/EBITDA, LL is currently trading at 7.43x, 10.6% lower than the industry average of 8.32x. Its forward non-GAAP P/E multiple of 9.79 is 19.8% lower than the industry average of 12.20.
The stock has slumped 60.3% over the past year and 57% year-to-date to close the last trading session at $7.35.
LL’s POWR Ratings reflect its poor prospects. It’s ranked #49 of 61 stocks in the Home Improvement & Goods industry. To see more of LL’s component grades, click here.
Mullen Automotive, Inc. (MULN)
MULN is an electric vehicle company that manufactures and distributes electric vehicles. In addition, the company operates CarHub, a digital platform that leverages AI to provide an interactive solution for buying and selling a car. It also offers battery technology and emergency point-of-care solutions.
For the fiscal quarter that ended June 30, 2022, the company’s loss from operations widened 184.5% year-over-year to $18.22 million. Net loss increased 289.9% from the prior-year period to $59.47 million, while its net loss per share came in at $0.16.
MULN’s trailing-12-months Price/Book multiple of 5.63 is 182.8% higher than the industry average of 1.99.
MULN’s shares have declined 97.1% over the past year and 95.9% year-to-date to close the last trading session at $0.22.
It is no surprise that MULN has an overall rating of F, which translates to a Strong Sell in our proprietary rating system.
It also has an F grade for Value and Stability and a D for Sentiment and Quality. MULN is ranked #57 out of the 65 stocks in the D-rated Auto & Vehicle Manufacturers industry.
To access MULN’s POWR Ratings for Growth and Momentum, click here.
PAYO shares were trading at $7.22 per share on Wednesday afternoon, down $0.19 (-2.56%). Year-to-date, PAYO has declined -1.77%, versus a -21.53% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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