Stocks stand on shaky ground, vulnerable to a whimsical market. Triggers for price plunges lurk in the shadows, often hidden in dismal earnings reports or grim headlines. Yet, sometimes, the warning whispers of trouble are discernible well in advance. Investors who keep their eyes peeled may spot red flags in dwindling financials, simmering service issues, reckless spending, or suspect business tactics.
Alas, the hour seems late for three companies heralding signs of impending trouble. Brace yourself for a journey through the murky waters of Nasdaq, where selling off seems less of an option and more of a necessity for TrustCo Bank Corp NY, Xerox Holdings Corporation, and FibroGen, Inc.
Decline in TrustCo Bank Corp NY (TRST)
Source: YummyBuum / Shutterstock
TrustCo Bank Corp NY (TRST) prides itself on delivering high-quality, cost-effective services to its patrons across a legacy of over 120 years.
Operating across various states in the U.S., such as New York, Palm Beach, and New Jersey, TRST focuses on customer deposits, loans, and investments. However, recent financial woes paint a bleak picture. FY2023 saw a staggering 22% drop in net income to $58.6 million from $75.2 million YOY, signaling trouble. Diluted earnings per share tumbled from $3.93 to $3.08. Piper Sandler has even sounded the alarm, advising investors to sell TRST.
With net interest income plummeting by 21.5% due to rising deposit costs, future profitability hangs in the balance amidst an unstable interest rate environment. The prudent decision seems to be bidding adieu to TRST before it’s too late.
Xerox Holdings Corporation’s (XRX) Downward Spiral
Source: Jonathan Weiss/ShutterStock.com
If you grew up hearing about Xerox Holdings Corporation (XRX) and its iconic copying machines, you’ll agree that the company’s descent raises eyebrows.
Diversifying into managed services, IT services, software, and automation, XRX has been restructuring its core. Yet, reports of a 9.1% YOY revenue dip in Q4 and a $58 million GAAP net loss forebode ill winds. Adjusted net income spiraled down by $90 million YOY, alongside a 380-basis-point plunge in adjusted operating margins. Xerox’s hope to revive double-digit adjusted operating income by 2026 seems quite far-fetched amidst underperformance and analyst skepticism.
With a bleak future, sliding revenues, and dismal analyst forecasts, exiting XRX while the going’s still good becomes a prudent move.
FibroGen, Inc.’s (FGEN) Uncertain Fate
Source: motorolka / Shutterstock.com
Renowned for its research in cancer, anemia, and fibrotic disease treatment, FibroGen, Inc. (FGEN) reigns as a prominent figure in China. However, it falters in essential global distribution deals.
Dependent on promising clinical trial outcomes, FGEN recalls the nightmare of the failed Phase 3 ZEPHYRUS-1 Study of Pamrevlumab last year, which decimated its stock value by around 80%. Recent financial reports echo distress, with Q4 recording a net loss of $56.2 million and an annual loss of $284.2 million. High clinical trial and drug development costs pose a grave threat to cash reserves, consequently hobbling operational viability.
Amidst a bleak profitability forecast and looming funding concerns, shedding FGEN now could protect one’s portfolio from a meltdown.
On the date of publication, Rick Orford did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
