When Wall Street turns bearish on a stock, it’s worth paying attention. These calls stand out because analysts rarely issue grim ratings on companies for fear their firms will lose out in other business lines such as M&A advisory.

At StockStory, we look beyond the headlines with our independent analysis to determine whether these bearish calls are justified. That said, here are three stocks where the outlook is warranted and some alternatives with better fundamentals.

Floor And Decor (FND)

Consensus Price Target: $53.91 (-8.6% implied return)

Operating large, warehouse-style stores, Floor & Decor (NYSE: FND) is a specialty retailer that specializes in hard flooring surfaces for the home such as tiles, hardwood, stone, and laminates.

Why Do We Avoid FND?

1. Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
2. Performance over the past three years shows its incremental sales were much less profitable, as its earnings per share fell by 12.9% annually
3. ROIC of 8% reflects management’s challenges in identifying attractive investment opportunities, and its decreasing returns suggest its historical profit centers are aging

Floor And Decor’s stock price of $58.97 implies a valuation ratio of 29.9x forward P/E. Dive into our free research report to see why there are better opportunities than FND.

Kadant (KAI)

Consensus Price Target: $343 (9.4% implied return)

Headquartered in Massachusetts, Kadant (NYSE: KAI) is a global supplier of high-value, critical components and engineered systems used in process industries worldwide.

Why Do We Think Twice About KAI?

1. Muted 5.9% annual revenue growth over the last two years shows its demand lagged behind its industrials peers
2. Incremental sales over the last two years were less profitable as its earnings per share were flat while its revenue grew
3. Waning returns on capital imply its previous profit engines are losing steam

At $313.57 per share, Kadant trades at 27.1x forward P/E. To fully understand why you should be careful with KAI, check out our full research report (it’s free).

Morgan Stanley (MS)

Consensus Price Target: $203.67 (-3.7% implied return)

Founded in 1924 during the post-WWI economic boom by former JP Morgan partners, Morgan Stanley (NYSE: MS) is a global financial services firm that provides investment banking, wealth management, and investment management services to corporations, governments, institutions, and individuals.

Why Is MS Not Exciting?

1. Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 6.1% over the last five years was below our standards for the financials sector
2. Earnings growth underperformed the sector average over the last five years as its EPS grew by just 7.3% annually
3. Scale is a double-edged sword because it limits the firm’s capital growth potential compared to its smaller competitors, as reflected in its below-average annual tangible book value per share increases of 5.8% for the last five years

Morgan Stanley is trading at $211.56 per share, or 17.8x forward P/E. Read our free research report to see why you should think twice about including MS in your portfolio.

Stocks We Like More

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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.