Cray Inc (CRAY) has seen share prices fall by more than 40% over the last year. That is painful, but the movement in share price is not a factor in the Zacks Rank. The Zacks Rank looks at earnings, and especially the earnings estimate revisions. Let’s take a look at why CRAY is now a Zacks Rank #5 (Strong Sell) in this Bear of the Day Article.
Right off the bat, I see some big red flags. Two consecutive quarters that were misses of the Zacks Consensus Estimate are bad, but not really bad enough to warrant a stock to move to a #5.
It should be noted that the June 2016 quarter which was reported in August was really painful to shareholders. The company missed the number by $0.08 in reporting a loss of $0.33 when a small loss of $0.25 was expected. That -32% negative earnings surprise helped push the stock lower by nearly 31% in the session following the release.
Revenues have come in light in each of the last two quarters as well. Again, this is not a factor in the Zacks Rank, but does play a role in the overall story of Cray.
Cray Inc. designs, develops, manufactures, markets and services the high-end of the high performance computing (HPC) market, primarily categories of systems, known as supercomputers and provides storage and data analytics solutions.
Here is the reason for this stock moving to a Zacks Rank #5 (Strong Sell). Estimates have been moving lower for the last several months. The Zacks Consensus Estimate for the current fiscal year was $0.82 back in July of this year. It moved to $0.34 in August and then $0.16 in November. More recently it has kicked lower by another penny.
The next fiscal years has also seen estimates tumble. The Zacks Consensus Estimate was $1.44 in July and is now down to $0.28. That is a huge drop!
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