Insteel Industries IIIN is among the largest manufacturers of steel wire reinforcing products in the United States. However, the company has faced challenges in achieving significant growth.
Calling Insteel’s stock a value trap might be premature, but IIIN shares have experienced a decline of over 25% this year. With potential risks still ahead, Insteel’s stock currently holds a Zacks Rank #5 (Strong Sell) designation, making it the Bear of the Day.
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Insteel Reports Underwhelming Q3 Results
Insteel’s stock took a hit of more than 10% last Thursday following its disappointing third-quarter results. The company posted an EPS of $0.24, matching the Zacks Consensus but down from $0.29 a share compared to the same period last year.
Investor confidence was further shaken as Q3 sales declined by 15% year-over-year to $134.4 million, falling short of the $140.4 million estimate by 4%. This decline stemmed from decreased steel shipments and dropping average selling prices (ASP).
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EPS Estimates for Insteel on the Decline
Earnings estimate revisions have taken a nosedive for Insteel’s current fiscal 2025 and FY26, dropping by 49% and 28% respectively over the past week. This recent trend contributes to the continued decline in IIIN shares and dilutes Insteel’s forward P/E valuation of 26.5X.
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Conclusion
Currently, it’s advisable to avoid Insteel’s stock, particularly given the significant decline in earnings outlook. Although IIIN trades at less than 1X sales, suggesting potential value, it is starting to resemble a typical value trap.
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Insteel Industries, Inc. (IIIN): Free Stock Analysis Report
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