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.
Whatever the consensus opinion may be, our team at StockStory cuts through the noise by conducting independent analysis to determine a company’s long-term prospects. Keeping that in mind, here are three stocks facing legitimate challenges and some alternatives worth exploring instead.
Edgewell Personal Care (EPC)
Consensus Price Target: $24.17 (3.2% implied return)
Boasting brands such as Banana Boat, Schick, and Skintimate, Edgewell Personal Care (NYSE:EPC) sells personal care products in the skin and sun care, shave, and feminine care categories.
Why Do We Think EPC Will Underperform?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Overall productivity fell over the last year as its plummeting sales were accompanied by a decline in its operating margin
- 6× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
Edgewell Personal Care is trading at $23.41 per share, or 11.3x forward P/E. To fully understand why you should be careful with EPC, check out our full research report (it’s free).
Caleres (CAL)
Consensus Price Target: $15 (10.8% implied return)
The owner of Dr. Scholl's, Caleres (NYSE:CAL) is a footwear company offering a range of styles.
Why Are We Out on CAL?
- Sales trends were unexciting over the last five years as its 5.4% annual growth was below the typical consumer discretionary company
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
- 8× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
At $13.54 per share, Caleres trades at 8.8x forward P/E. Check out our free in-depth research report to learn more about why CAL doesn’t pass our bar.
WSFS Financial (WSFS)
Consensus Price Target: $75.08 (5.2% implied return)
Founded in 1832 as Wilmington Savings Fund Society and one of the oldest banks in America still operating under its original name, WSFS Financial (NASDAQ:WSFS) operates a community banking and wealth management franchise primarily serving customers in the Mid-Atlantic region through its main subsidiary, WSFS Bank.
Why Do We Think Twice About WSFS?
- Annual net interest income growth of 9.7% over the last five years was below our standards for the banking sector
- Estimated net interest income growth of 2.6% for the next 12 months implies demand will slow from its five-year trend
- Net interest margin shrank by 14.5 basis points (100 basis points = 1 percentage point) over the last two years, suggesting the profitability of its loan book is decreasing or the market is becoming more competitive
WSFS Financial’s stock price of $71.37 implies a valuation ratio of 1.3x forward P/B. Dive into our free research report to see why there are better opportunities than WSFS.
High-Quality Stocks for All Market Conditions
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don't just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn't over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.