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Bear of the Day: Cott (COT)

David Bartosiak

With the broad market coming so strong off the lows, investors are looking for opportunities. It may be tempting to jump in there and buy the stocks which are off the most from their highs. Afterall, they are likely the stocks with the most to gain on some sort of reversion to the mean. However, that is not the best idea as these stocks are likely off their highs for a reason. One of those reasons could be a change in earnings estimates. The Zacks Rank provides an easy way for investors to screen stock ideas to see if this is in fact the case.

One stock which is off considerably from its highs, which investors may want to avoid, is today’s Bear of the Day. I’m talking about Zacks Rank #5 (Strong Sell) Cott Corp (COT). Cott Corporation, together with its subsidiaries, operates as a route-based service company in North America and Europe. It operates in three segments: Route Based Services; Coffee, Tea and Extract Solutions; and All Other. The company's product portfolio includes bottled water, coffee, brewed tea, water dispensers, coffee and tea brewers, specialty coffee, liquid coffee or tea concentrate, single cup coffee, cold brewed coffee, iced blend coffee or tea beverages, blended teas, hot tea, sparkling tea, coffee or tea extract solutions, filtration equipment, hot chocolate, soups, malt drinks, creamers/whiteners, cereals, beverage concentrates, and mineral water. 

Cott is currently a Zacks Rank #5 (Strong Sell). The reason for the unfavorable ranks lies in the recent earnings estimate revisions to the downside. Over the last thirty days, analysts have cut their estimates for the current quarter, next quarter and next year. The negative revisions have dropped the Zacks Consensus Estimate for next quarter from a 2-cent gain to a 5-cent loss. Next year’s number has dropped from 40 cents to 35.

Cott Corporation Price and Consensus

Cott Corporation Price and Consensus | Cott Corporation Quote

While there is still some growth in EPS estimates for next year, the estimates have come down considerably from their highs. Looking at the Price, Consensus, and EPS Surprise Chart for Cott, you can see that the company has had a tough time delivering real earnings growth year in and year out.

Investors looking for other stocks in the same industry should check out Zacks Rank #2 (Buy) stocks Monster Beverage (MNST) and New Age Beverage (NBEV).

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