The major stock market indices ended higher on Friday on account of solid earnings from the retail sector and a positive inflation report after registering more than seven weeks of continuous losses. The Federal Reserve inflation gauge rose 6.3% in April from its year-ago value, slightly below a four-decade high in March. However, according to Bill Adams, chief economist at Comerica Bank, "Inflation is finally slowing, but it's a little early for high-fives.” Moreover, since gas and food prices have increased in May and the Ukraine-Russia conflict and COVID-19-related lockdowns in China could further disrupt supply chains, it is expected that the prices could accelerate again in the future.
Despite Friday's rally, Fed's possible interest rate hikes to control inflation and recession fears prevailing in the broader market could continue to raise investors' concerns. According to a famous economist David Rosenberg, the S&P 500 will further crash by 17% to 3,300. Moreover, not all companies possess the required fundamentals to resist the market uncertainties and may be unable to dodge the market fluctuations.
Carvana Co. (CVNA), 1Life Healthcare, Inc. (ONEM), and Cano Health, Inc. (CANO) have slumped significantly in price over the past few months and are not likely to rebound anytime soon, given their bleak growth attributes and deteriorating financial prospects. So, we think these stocks are best avoided now.
Carvana Co. (CVNA)
CVNA and its subsidiaries function as an e-commerce platform for buying and selling used cars in the United States. The company's platform permits customers to research and identify a vehicle; inspect it using the company's 360-degree vehicle imaging technology; obtain financing and warranty coverage; purchase the vehicle; and schedule delivery or pick-up from their desktop or mobile devices.
For the first quarter ending March 31, 2022, CVNA's gross profit decreased 11.8% year-over-year to $298 million. The net loss increased 622.2% from its year-ago value to $260 million, while its loss per share increased 528.3% from its prior-year quarter to $2.89.
Analysts expect CVNA's EPS to decline 292.92% and remain negative in the third quarter ending September 2022. The company's shares have plunged 85.4% year-to-date and 90% over the past nine months.
CVNA's POWR ratings are consistent with this bleak outlook. The stock has an overall rating of F, which translates to Strong Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
CVNA is rated an F grade for Quality, Growth, and Stability. Within the F-rated Internet industry, it is ranked #68 of 69 stocks.
To see additional POWR Ratings for Value, Sentiment, and Momentum for CVNA, Click here.
1Life Healthcare, Inc. (ONEM)
Headquartered in San Francisco, California, ONEM functions as a membership-based primary care platform under the One Medical brand. The company has built a healthcare membership structure based on direct consumer enrollment and third-party sponsorship.
During the first quarter ending March 31, 2022, ONEM's loss from operations increased 186.1% year-over-year to $92.63 million, while its net loss grew 131.1% from its year-ago value to $90.86 million. The company's loss per share rose 62.1% from its prior-year quarter to $0.47.
The consensus EPS estimate is expected to remain negative in the second quarter ending June 2022. The stock has declined 50% year-to-date and 63.8% over the past nine months.
ONEM's weak fundamentals are reflected in its POWR ratings. The stock has an overall F rating, which equates to Strong Sell in our POWR Ratings system. The stock also has a D grade for Growth, Value, and Quality. In the C-rated Medical - Services & Rentals industry, it is ranked 86 of 86 stocks.
In addition to the POWR Ratings grades I have just highlighted, you can see the ONEM rating for Momentum, Sentiment, and Stability here.
Cano Health, Inc. (CANO)
Headquartered in Miami, Florida, CANO offers primary care medical services to its members in the United States and Puerto Rico. It owns and operates medical centers enabled by CanoPanorama, a proprietary population health management technology-powered platform that provides the healthcare providers at its medical centers with a 360-degree view of their members with actionable insights to improve care decisions and member engagement.
CANO's loss from operations grew 140% year-over-year to $11.46 million for the first quarter ending March 31, 2022, while its net loss amounted to $85.00 million. The net cash used in operating activities increased 153.3% from its prior-year quarter to $37.20 million.
Analysts expect CANO's consensus EPS to remain negative in the second quarter ending June 2022. The company's shares have plunged 38.4% year-to-date and 54.7% over the past nine months.
CANO's poor prospects are also apparent in its POWR Ratings. The stock has an overall F rating, which equates to a Strong Sell in our POWR Ratings system. It has an F grade for Stability and Sentiment and a D grade for Growth. CANO is ranked #13 of 13 in the C-rated Medical – Hospitals industry.
Click here to see the additional POWR Ratings for CANO (Quality, Value, and Momentum).
CVNA shares were trading at $31.84 per share on Tuesday afternoon, down $2.01 (-5.94%). Year-to-date, CVNA has declined -86.26%, versus a -12.42% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
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