While the coronavirus vaccine deployment is gradually curbing the spread of the virus, individuals and businesses are still relying significantly on technological solutions to remain operational and/or to seek entertainment. The demand for technology products and services has been rising thanks to a continuation of pandemic-driven trends, and these trends are likely to remain unchanged even after the pandemic.
However, there are some technology companies that have underperformed significantly despite the sector’s growth. These companies have failed to capitalize on the change in consumer and business behavior.
Fiserv, Inc. (FISV), Coupa Software, Inc. (COUP), and Cree, Inc. (CREE) are three such companies. They have seen a fall in their stock prices. And analysts are skeptical about the performance of these stocks in coming quarters too. So, we think investors should take a pass on these stocks for now.
Fiserv, Inc. (FISV)
FISV delivers financial technology related services that debit and credit card transaction processing. The company has worldwide operations. FISV’s stock has declined 10.2% over the past year.
FISV recently announced plans to acquire Ondot Systems, a digital experience platform for financial institutions. However, it remains to be seen whether the new acquisition will benefit the company.
For the quarter ended September 30, 2020 the company’s adjusted revenue declined 1% versus the same period last year. Its revenue in its Acceptance segment also declined 1% during that period. FISV is expected to see a revenue decline of 2.9% in 2020.
FISV’s poor prospects are also apparent in its POWR Ratings. The stock has an overall rating of C, which equates to Neutral in our proprietary ratings system. FISV has a grade of D for both Value and Sentiment. The Value grade is consistent with the stock’s higher-than-industry forward Price/Sales ratio (4.78 vs. 4.07).
In total, we rate FISV on eight different components. Beyond what we stated above we have also given FISV grades for Stability, Momentum, Growth, Quality, and Industry. Get all the FISV ratings here.
Coupa Software, Inc. (COUP)
COUP provides a cloud-based spend management platform for enterprise customers. The company has users worldwide. COUP’s stock price has declined 6.23% year-to-date.
Currently, COUP is not profitable, and it may remain unprofitable in the near future. For the quarter ended September 30, 2020 the company’s operating loss increased 98.8% compared to the same period last year. Its net income declined 8.4% during the same period. COUP is expected to see an EPS decline of 105% for the quarter ended April 30, 2021 and 9.6% in 2021.
COUP’s POWR Ratings are consistent with its underperformance. The company has an overall rating of D, which equates to Sell in our proprietary ratings system. COUP has a grade of D for Stability, Quality and Value. The value grade is consistent with its forward P/E of 63.56x versus the industry average of 26.75x. In the 60-stock, C-rated Software – Business industry, it is ranked #54. Click here to see the additional POWR Ratings for COUP (Growth, Momentum, and Sentiment).
Cree, Inc. (CREE)
CREE develops and manufactures lighting class LEDs and semiconductor products. The company’s products find application in the radio frequency and power segments. CREE’s stock price has decreased 5.43% over the last two weeks.
The company recently announced that it will be pivoting away from LED lighting. This change in business model is yet to be tested and may result in challenges for the company in the near future.
For the quarter ended December 30, 2020, the company’s loss per share came in at $0.24. CREE is expected to see a revenue decline of 39.5% for the quarter ended March 31, 2021 and 32.3% for 2021. The company’s EPS is expected to decline 95.6% for 2021 and at a rate of 20.6% per annum over the next five years.
CREE’s poor prospects are also apparent in its POWR Ratings. The stock has an overall rating of F, which equates to Strong Sell in our proprietary ratings system. CREE has a grade of F for value, sentiment, and quality.
Beyond what we have stated above we have also given CREE grades for Stability, Momentum, Growth, and Industry. Get all the CREE ratings here.
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FISV shares were trading at $110.29 per share on Tuesday afternoon, up $3.79 (+3.56%). Year-to-date, FISV has declined -3.14%, versus a 2.34% rise in the benchmark S&P 500 index during the same period.
About the Author: Aaryaman Aashind
Aaryaman is an accomplished journalist that’s passionate about providing in-depth insights about investing and personal finance. Recently he has been focused on the stock market and he specializes in evaluating high-growth stocks. More…