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Bear Of The Day: Brady (BRC)

Brian Bolan
·2-min read

Brady (BRC) is a Zacks Rank #5 (Strong Sell) but it could be worth a deeper look even as estimates have moved lower.  This article will look at why this stock is a Zacks Rank #5 (Strong Sell) in this Bear of the Day article.

Description

Brady Corporation manufactures and supplies identification solutions (IDS) and workplace safety (WPS) products to identify and protect premises, products, and people in the United States and internationally. It also offers stock and custom identification products, as well as sells related resale products. Brady Corporation was incorporated in 1914 and is headquartered in Milwaukee, Wisconsin.

Earnings History

When I look at a stock, the first thing I do is look to see if the company is beating the number.  This tells me right away where the market’s expectations have been for the company and how management has communicated to the market.  A stock that consistently beats has management communicating expectations to Wall Street that can be achieved.  That is what you want to see.

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In the case of BRC, I two beats of the  Zacks Consensus Estimate, one meet and one miss.  This alone does not make the stock a Zacks Rank #1 (Strong Buy) and it doesn’t make it a Zacks Rank #5 (Strong Sell) either.

The Zacks Rank does care about the earnings history, but it is much more heavily influenced by the movement of earnings estimates.

Earnings Estimates

The Zacks Rank tells us which stocks are seeing earnings estimates move higher or in this case lower.  For BRC see annual estimates moving lower.

The current fiscal year consensus number moved from $3.45  to $3.30 over the last 60 days.

The next year has moved from $3.40 to $3.35.

Negative movement in earnings estimates like that is why this stock is a Zacks Rank #5 (Strong Sell).

It should be noted that a majority of stocks in the Zacks universe are seeing negative earnings estimate revisions.  That means that the stocks that are seeing small but negative earnings estimate revisions are falling to a Zacks Rank #5 (Strong Sell).


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