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.
At StockStory, we look beyond the headlines with our independent analysis to determine whether these bearish calls are justified. Keeping that in mind, here are three stocks where the outlook is warranted and some alternatives with better fundamentals.
The Cheesecake Factory (CAKE)
Consensus Price Target: $97.43 (-9.9% implied return)
Celebrated for its delicious (and free) brown bread, gigantic portions, and delectable desserts, Cheesecake Factory (NASDAQ: CAKE) is an iconic American restaurant chain that also owns and operates a portfolio of separate restaurant brands.
Why Are We Wary of CAKE?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new diners into its restaurants
- Operating margin of 5.3% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
- High net-debt-to-EBITDA ratio of 5× increases the risk of forced asset sales or dilutive financing if operational performance weakens
The Cheesecake Factory’s stock price of $108.15 implies a valuation ratio of 23.3x forward P/E. Dive into our free research report to see why there are better opportunities than CAKE.
Energizer (ENR)
Consensus Price Target: $22.33 (3.5% implied return)
Masterminds behind the viral Energizer Bunny mascot, Energizer (NYSE: ENR) is one of the world's largest manufacturers of batteries.
Why Do We Think ENR Will Underperform?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Demand will likely be weak over the next 12 months as Wall Street expects flat revenue
- High net-debt-to-EBITDA ratio of 5× could force the company to raise capital on unfavorable terms if market conditions deteriorate
At $21.59 per share, Energizer trades at 6.4x forward P/E. To fully understand why you should be careful with ENR, check out our full research report (it’s free).
City Holding (CHCO)
Consensus Price Target: $142.40 (0.9% implied return)
With roots dating back to 1957 and a strategic presence along the I-64 and I-81 corridors, City Holding (NASDAQGS:CHCO) operates as a financial holding company providing banking, trust, and investment services through its subsidiary City National Bank across West Virginia, Kentucky, Virginia, and Ohio.
Why Are We Hesitant About CHCO?
- Net interest income trends were unexciting over the last five years as its 9.8% annual growth was below the typical banking firm
- Estimated net interest income growth of 3.7% for the next 12 months implies demand will slow from its five-year trend
- Earnings growth underperformed the sector average over the last two years as its EPS grew by just 8.6% annually
City Holding is trading at $141.12 per share, or 2.4x forward P/B. Read our free research report to see why you should think twice about including CHCO in your portfolio.
Stocks We Like More
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.
