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Bear of the Day: Caesar Stone (CSTE)

Kevin Cook

I last wrote about Caesar Stone (CSTE) as the Bear of the Day in March of 2018 when shares were trading above $20.

 

Then a $750 million company, and now just a $400 million concern, Caesar Stone manufactures engineered quartz surfaces for residential and commercial buildings as countertops, vanities, wall cladding, floors and other interior surfaces.

 

Here's what I wrote in March of 2018...

 

The Israel-based company was identified as a Zacks #5 Rank Strong Sell in June of last year (2017) when shares were trading $38. It has fallen 45% since then.

 

And the downward trend of earnings has persisted with recent analyst estimate revisions taking the full-year 2018 EPS projection from $1.66 to $1.53, representing only 5% profit growth.

 

CTSE's decline really picked up momentum after a Q3 earnings miss of 36%, dropping from $28 to $23 in early November.

 

(end of excerpt from 3/14/18)

 

In November, CSTE delivered another series of misses. Here's what we reported at the time...

 

CaesarStone came out with quarterly earnings of $0.29 per share, missing the Zacks Consensus Estimate of $0.31 per share. This compares to earnings of $0.31 per share a year ago. These figures are adjusted for non-recurring items.

 

This quarterly report represents an earnings surprise of -6.45%. A quarter ago, it was expected that this maker of quartz surface slabs would post earnings of $0.19 per share when it actually produced earnings of $0.23, delivering a surprise of 21.05%.

 

Over the last four quarters, the company has surpassed consensus EPS estimates just once.

 

CaesarStone, which belongs to the Zacks Building Products - Miscellaneous industry, posted revenues of $142.84 million for the quarter ended September 2019, missing the Zacks Consensus Estimate by 2.28%. This compares to year-ago revenues of $147.69 million. The company has topped consensus revenue estimates just once over the last four quarters.

 

Fast forward to February and the Caesar delivered another blow to investors with a 36% EPS miss for its Q4. Shares slid 14% since that Feb 12 report and the consensus estimate for this year dropped dramatically from $1.16 to $0.79.

 

In March of 2018, I wrote "With CSTE shares trading at 5-year lows and under 14X EPS estimates, it may be tempting to do some bottom-fishing here. But until the earnings estimates stop going down and start going back up, it may be better to fish another quarry."

 

The story hasn't changed. The Zacks Rank will let you know when the time is right again for this Caesar.

 

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