Bear of the Day: Insteel Industries (IIIN)

Although Insteel Industries IIIN is one of the largest manufacturers of steel wire reinforcing products in the United States, the company has struggled to reach its appealing growth trajectory.While it may be too soon to call Insteel’s stock a value trap, IIIN shares have fallen more than -25% this year. Unfortunately, more downside risk may be ahead landing Insteel’s stock a Zacks Rank #5 (Strong Sell) and the Bear of the Day.Image Source: Zacks Investment Research Insteel’s Subpar Q3 ReportNotably, Insteel’s stock plummeted more than -10% last Thursday after reporting subpar results for its fiscal third quarter. The dismal reaction comes as Insteel posted Q3 EPS of $0.24 which reached the Zacks Consensus but declined from $0.29 a share in the comparative quarter.Further diminishing investor confidence was that Q3 sales fell -15% year over year to $134.4 million and missed estimates of $140.4 million by -4%. The dip on Insteel’s top and bottom lines come as the company saw a decrease in its steel shipments along with a decline in average selling prices (ASP).  Image Source: Zacks Investment Research Insteel’s Declining EPS Estimates Continuing an unsavory streak of missing top line expectations, earnings estimate revisions for Insteel’s current fiscal 2025 and FY26 have fallen -49% and -28% in the last week respectively. This largely suggests the decline in IIIN shares may continue and has started to dilute Insteel’s reasonable forward P/E valuation of 26.5XImage Source: Zacks Investment Research Bottom Line For now, Insteel’s stock looks like one that should be avoided especially considering the drastic decline in its earnings outlook. To that point, investor’s may not be so swayed by Insteel’s valuation with IIIN trading at less that 1X sales but starting to show remnants of a value trap.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Insteel Industries, Inc. (IIIN): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks