Identifying and analyzing risk is crucial before investing in stocks, as it reduces the odds of future disappointments. However, the risk landscape for enterprises continues to evolve, making it tough for investors to keep a tab on it.
Thanks to TipRanks’ comprehensive and dynamic (incorporating the latest data set available) Risk Factors tool, investors can now easily assess the risk associated with a particular stock and keep up with the fast-changing risk scenario.
Accordingly, let’s take a look at three stocks that have recently added new risk factors.
Crocs
Casual footwear giant Crocs (CROX) is growing rapidly, thanks to the acceleration in demand for comfortable footwear. However, highlighting the ongoing supply-chain disruptions, Crocs added one new risk factor under its Production category since September 2021.
In its SEC filing, Crocs stated that supply-chain disruptions could negatively impact its production, lead to higher product costs and hurt its brand loyalty. Crocs expects to be impacted by the global logistics challenges for the rest of 2021, despite remedial measures. Specifically, those measures involve plans to invest $75 million in air freight to boost its inventory position in the first half of 2022.
However, on a positive note, Crocs’ CEO, Andrew Rees, expects the company to deliver more than 20% revenue growth in 2022, despite the temporary supply chain disruptions.
Overall, Crocs’ main risk category is Finance & Corporate, accounting for 25% of its total risks. Nonetheless, it still compares favorably to the sector average of 39.5%. Meanwhile, its risks in the Macro & Political category are higher than the sector average.
Crocs stock has risen over 139% this year, and sports an analyst rating consensus of Moderate Buy, based on 5 Buys and 2 Holds. Meanwhile, the average Crocs price target of $187.57 implies 25.3% upside potential from current levels.
Honeywell International
Honeywell International (HON) has added one new risk factor to its main risk category, Legal & Regulatory, since September 2021. Per the TipRanks’ Risk Factors tool, Honeywell International’s Legal & Regulatory accounts for 35% of its total risks and compares unfavorably to the sector average of 22.6%.
The company stated that President Biden’s executive order regarding the mandatory vaccination of “U.S.-based employees of companies that work on or in support of federal contracts” could have an adverse impact on its business.
Honeywell expects that this order, along with other vaccine mandates, could lead to employee attrition and difficulty securing future labor needs, which, in turn, would adversely impact its operations and financial condition.
Interestingly, Honeywell recently raised its business jet deliveries forecast on improving trends in the aviation sector. Yet its stock has risen only 3.5% this year, underperforming the Nasdaq composite index, which is up about 19% on a year-to-date basis, by a considerable margin.
Meanwhile, on TipRanks, HON stock has an analyst rating consensus of Moderate Buy, based on 5 Buys and 5 Holds. The average Honeywell International price target of $239.50 implies 10.2% upside potential to current levels.
Qualtrics International
As per the TipRanks’ Risk Factors tool, Qualtrics International’s (XM) main risk category is Finance & Corporate, accounting for 38% of its total risks. This risk percentage still sits well below the sector benchmark of 49%.
Since September 2021, the technology company has added three new risks factors. One is under its Corporate Activity and Growth sub-category, where Qualtrics noted that the benefits of its Clarabridge acquisition could be achieved only upon the successful integration of Clarabridge within its operations. Qualtrics International completed the acquisition of Clarabridge, a software company, earlier this month.
Additionally, under its Legal & Regulatory category, Qualtrics acknowledged that Clarabridge might have liabilities that could be unknown to the company. Further, those liabilities could adversely impact its business.
Nevertheless, all of Qualtrics International’s risk factors compare favorably to the sector benchmarks.
On TipRanks, XM is a Moderate Buy, based on 10 Buys and 4 Holds. The average Qualtrics International price target of $53.25 implies approximately 26.8% upside potential to current levels.
Disclosure: On the date of publication, Amit Singh had no position in any of the companies discussed in this article.
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