The stock market has witnessed its worst first half in over 50 years in 2022 due to the Russia-Ukraine war, the multi-decade high inflation, and the Fed’s interest rate hikes to tame the rising prices. On the other hand, the conflict brewing between China and Taiwan could worsen the geopolitical crisis.
Additionally, a resilient job market could prompt the Fed to go ahead with another steep interest rate hike to thwart inflation, tempering recession fears. Moreover, Federal Reserve Chairman Jerome Powell has raised the possibility of a third-straight 0.75-percentage point rate hike. “Another unusually large increase could be appropriate” at the September meeting, he said.
Given the uncertain macro environment, we think it could be best to avoid fundamentally weak stocks Wynn Resorts, Limited (WYNN) and Boot Barn Holdings, Inc. (BOOT).
Wynn Resorts, Limited (WYNN)
WYNN designs, develops, and operates integrated resorts through its Wynn Palace, Wynn Macau, and Las Vegas Operations segments.
For the fiscal second quarter ended June 30, 2022, WYNN’s total operating revenues decreased 8.2% year-over-year to $908.83 million. Net loss increased 23.1% from the prior-year quarter to $213.42 million, while operating loss came in at $52.03 million, up 76.2% year-over-year. Net loss per share came in at $1.14.
The consensus revenue estimate of $870.69 million for the fiscal first quarter ending September 2022 indicates a 12.5% year-over-year decline. Analysts expect its EPS to come in at a negative $1.09 in the same period. The company also missed the consensus EPS estimates in all the trailing four quarters.
In terms of its forward Price/Sales, WYNN is currently trading at 1.98x, 98.1% higher than the industry average of 1x. Its forward EV/Sales multiple of 4.35 is 257.8% higher than the industry average of 1.22.
The stock has declined 30.3% over the past nine months to close the last trading session at $68.33.
WYNN’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.
WYNN has a Value, Sentiment, and Stability grade of D. In the 29-stock, D-rated Entertainment - Casinos/Gambling industry, it is ranked #23.
Click here to see the additional POWR Ratings for WYNN (Growth, Momentum, and Quality).
Boot Barn Holdings, Inc. (BOOT)
BOOT, a lifestyle retail chain, operates specialty retail stores in the United States.
For the fiscal first quarter ended June 25, 2022, BOOT’s income from operations decreased 2.3% year-over-year to $52.43 million. Net income decreased 3.3% from the prior-year period to $39.32 million. The company’s EPS came in at $1.29, down 4.4% from the prior-year period.
For the fiscal quarter ending September 2022, Street EPS estimate of $0.90 reflects a 27.8% year-over-year decrease. Also, the EPS estimate of $6.03 indicates a 4.7% year-over-year decline in the ongoing fiscal year.
In terms of its forward Price/Book, BOOT is currently trading at 2.97x, 7.6% higher than the industry average of 2.76x. Its forward EV/Sales multiple of 1.52 is 25% higher than the industry average of 1.22.
The stock has slumped 40.7% year-to-date and 19.3% over the past three months to close the last trading session at $73.01.
It’s no surprise that BOOT has an overall D rating, which translates to Sell in our POWR Rating system. The stock has a D grade for Stability and Sentiment. It is ranked #63 of 67 stocks in the Fashion & Luxury industry.
To see the additional POWR Ratings for Growth, Momentum, Quality, and Value for BOOT, click here.
WYNN shares were trading at $67.38 per share on Tuesday morning, down $0.95 (-1.39%). Year-to-date, WYNN has declined -20.77%, versus a -9.26% 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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