Bear of the Day: DMC Global (BOOM)
While the title of this article is in fact a “Bear of the Day” it is a bit of a misnomer. Meaning, I am not bearish about the long-term prospects of this company. Rather, I am merely pointing out some bearish activity that has been happening in earnings estimates. This could be a warning sign that is flashing for long-term investors to consider. I’m here to help weigh the good versus the bad.
Today’s Bear of the Day is DMC Global BOOM. DMC Global Inc. provides a suite of technical products for the energy, industrial, and infrastructure markets worldwide. The company operates in two segments, NobelClad and DynaEnergetics. The company sells its products through direct sales personnel, program managers, and independent sales representatives. The company was formerly known as Dynamic Materials Corporation and changed its name to DMC Global Inc. in November 2016.
The stock is currently a Zacks Rank #5 (Strong Sell) because of earnings estimates coming from analysts all over Wall Street. Analysts have been slashing their numbers, expecting less from the company. At first glance, this is bearish. Take the current year EPS number for example. Ninety days ago, our Zacks Consensus Estimates called for 56 cents EPS for the year. That number has since dropped down to 22 cents. The trend continues in next year’s numbers as well as our Zacks Consensus Estimate is off from $1.57 to 99 cents. That’s the bearish news.
DMC Global Price and Consensus
On the flipside, these numbers still represent huge growth. Current year estimates call for 214% earnings growth, even at 22 cents per share, while next year’s 99-cent number is good for another 350% of growth. This is something the long-term investors in the stock should point to as a bullish point. That growth helps to partly justify the stock’s PE ratio. It is way up at 187x earnings though. Compare that to an industry average of 15.4x and the S&P 500’s 22.78x.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.