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Bear of the Day: Caesarstone (CSTE)

Zacks

Caesarstone (CSTE) is a $750 million maker of engineered quartz surfaces such as countertops, vanities, wall cladding, floors and other interior surfaces.

The Israel-based company was identified as a Zacks #5 Rank Strong Sell in June of last year when shares were trading $38. It has fallen 45% since then.

And the downward trend of earnings has persisted with recent analyst estimate revisions taking the full-year 2018 EPS projection from $1.66 to $1.53, representing only 5% profit growth.

CTSE's decline really picked up momentum after a Q3 earnings miss of 36%, dropping from $28 to $23 in early November.

With little improvement for Q4, which notched a 33% earnings miss, the current March quarter is projected to realize a year-over-year profit drop of 47%.

Here's a look at the earnings and price decline via the Zacks Proprietary Price & Consensus chart…



And here were some highlights from the company's year-end report delivered on February 7:

  • Fourth-quarter loss of $6 million, after reporting a profit in the same period a year earlier, on revenue of $148.1 million in the period.
  • The loss of 19 cents per share, adjusted for one-time gains and costs, came to 22 cents.
  • For 2017, the company reported profit of $26.2 million, or 73 cents per share. Revenue was reported as $588.1 million.
  • Caesarstone expects full-year revenue in the range of $612 million to $632 million, representing 5.8% growth at the midpoint.


With CSTE shares trading at 5-year lows and under 14X EPS estimates, it may be tempting to do some bottom-fishing here. But until the earnings estimates stop going down and start going back up, it may be better to fish another quarry.

The Zacks Rank will let you know when the time is right again.

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