Wall Street has issued downbeat forecasts for the stocks in this article. These predictions are rare - financial institutions typically hesitate to say bad things about a company because it can jeopardize their other revenue-generating business lines like M&A advisory.
At StockStory, we look beyond the headlines with our independent analysis to determine whether these bearish calls are justified. Keeping that in mind, here are three stocks where the skepticism is well-placed and some better opportunities to consider.
Franklin Resources (BEN)
Consensus Price Target: $26.68 (-0.7% implied return)
Operating under the widely recognized Franklin Templeton brand since 1947, Franklin Resources (NYSE:BEN) is a global investment management organization that offers financial services and solutions to individuals, institutions, and wealth advisors worldwide.
Why Should You Sell BEN?
- Annual revenue growth of 4.5% over the last two years was below our standards for the financials sector
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 2.5% annually while its revenue grew
- Low return on equity reflects management’s struggle to allocate funds effectively
Franklin Resources is trading at $26.87 per share, or 10.6x forward P/E. Dive into our free research report to see why there are better opportunities than BEN.
F&G Annuities & Life (FG)
Consensus Price Target: $27 (-2.2% implied return)
Founded in 1959 and serving approximately 677,000 policyholders who rely on its financial protection products, F&G Annuities & Life (NYSE:FG) provides fixed annuities, life insurance, and pension risk transfer solutions to retail and institutional clients.
Why Are We Cautious About FG?
- Efficiency has decreased over the last four years as its pre-tax profit margin fell by 21.6 percentage points
- Book value per share tumbled by 4.6% annually over the last four years, showing insurance sector trends are working against its favor during this cycle
- Underwhelming 9.4% return on equity reflects management’s difficulties in finding profitable growth opportunities
F&G Annuities & Life’s stock price of $27.62 implies a valuation ratio of 6.6x forward P/E. Check out our free in-depth research report to learn more about why FG doesn’t pass our bar.
Fidelis Insurance (FIHL)
Consensus Price Target: $22.39 (5.1% implied return)
Founded in Bermuda in 2014 and designed to adapt nimbly to evolving market conditions, Fidelis Insurance (NYSE:FIHL) is a global specialty insurance and reinsurance company focused on creating value through strategic capital allocation, expert risk selection and a network of long-term underwriting partnerships.
Why Are We Hesitant About FIHL?
- Day-to-day expenses have swelled relative to revenue over the last two years as its pre-tax profit margin fell by 45.9 percentage points
- Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 4.7% annually
- Muted 9.3% annual book value per share growth over the last two years shows its capital generation lagged behind its insurance peers
At $21.31 per share, Fidelis Insurance trades at 0.7x forward P/B. If you’re considering FIHL for your portfolio, see our FREE research report to learn more.
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