3 Reasons CDRE is Risky and 1 Stock to Buy Instead
Is there a buying opportunity in Cadre, or does it present a risk to your portfolio? Dive into our full research report to see our analyst team's opinion, it's free.
Despite the more favorable entry price, we're cautious about Cadre. Here are three reasons why CDRE doesn't excite us and a stock we'd rather own.
Originally known as Safariland, Cadre (NYSE:CDRE) specializes in manufacturing and distributing safety and survivability equipment for first responders.
Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It's also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.
Looking at the trend in its profitability, Cadre's operating margin decreased by 2 percentage points over the last five years. This raises questions about the company's expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Its operating margin for the trailing 12 months was 11.8%.
We track the change in earnings per share (EPS) because it highlights whether a company's growth is profitable.
Cadre's full-year EPS grew at a weak 3.2% compounded annual growth rate over the last three years, worse than the broader industrials sector.
If you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.
As you can see below, Cadre's margin dropped by 5.5 percentage points over the last five years. If its declines continue, it could signal increasing investment needs and capital intensity. Cadre's free cash flow margin for the trailing 12 months was 4.6%.
Cadre isn't a terrible business, but it isn't one of our picks. After the recent drawdown, the stock trades at 10.5× forward EV-to-EBITDA (or $30.01 per share). Beauty is in the eye of the beholder, but we don't really see a big opportunity at the moment. We're pretty confident there are superior stocks to buy right now. We'd suggest looking at the most entrenched endpoint security platform on the market.
The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
9 minutes ago
- Yahoo
Trump Administration Posts Guidance on Tariff Rollout
(Bloomberg) -- President Donald Trump's expanded reciprocal tariffs will not apply to any products loaded onto a vessel for transport into the US before 12:01 a.m. New York time on Thursday, according to guidance issued by US Customs and Border Protection. PATH Train Service Resumes After Fire at Jersey City Station Chicago Curbs Hiring, Travel to Tackle $1 Billion Budget Hole Seeking Relief From Heat and Smog, Cities Follow the Wind Mayor Asked to Explain $1.4 Billion of Wasted Johannesburg Funds The notice, posted by the federal government on Monday, outlines implementation of the tariffs Trump announced last week, which are expected to ratchet up levies on dozens of trading partners. Expected exemptions for products under the US-Mexico-Canada free trade agreement negotiated by the president during his first term are included in the document, as are exemptions for relief items like food, clothing and medicine set to be distributed as aid. So is the president's threatened penalty of a 40% tariff on goods deemed by the federal government to be transshipped to avoid country-specific duties. Taken together, the average US tariff rate will rise to 15.2% if rates are implemented as announced, according to Bloomberg Economics. That's up from 13.3% earlier and significantly higher than the 2.3% in 2024 before Trump took office. Trump's country-based tariffs have been billed as the centerpiece of his plan to shrink trade deficits and pressure companies to shift manufacturing jobs and investment to the US. Trump previously delayed his so-called reciprocal tariffs, first announced in April, to allow time for negotiations as nations sought to obtain better trade terms. Some countries, including Switzerland and India, are still attempting to negotiate deals to lower their duties ahead of Thursday's deadline. Trump is expected to unveil separate tariffs on imports of pharmaceuticals, semiconductors, critical minerals and other key industrial products in the coming weeks, meaning ongoing uncertainty for companies and investors. And on Monday, he also threatened to impose 'substantially' higher levies on Indian exports to the US over New Delhi's purchases of Russian oil. While his tariffs are already bringing in billions in revenue for the US government, the longterm economic impacts remain unclear, with critics saying they will raise costs for US consumers and businesses and exacerbate inflation. (Updates with additional details, background throughout) AI Flight Pricing Can Push Travelers to the Limit of Their Ability to Pay Government Steps Up Campaign Against Business School Diversity What Happens to AI Startups When Their Founders Jump Ship for Big Tech How Podcast-Obsessed Tech Investors Made a New Media Industry Everyone Loves to Hate Wind Power. Scotland Found a Way to Make It Pay Off ©2025 Bloomberg L.P.
Yahoo
9 minutes ago
- Yahoo
Corebridge Financial (NYSE:CRBG) Reports Upbeat Q2
Retirement solutions provider Corebridge Financial (NYSE:CRBG) beat Wall Street's revenue expectations in Q2 CY2025, with sales up 5.8% year on year to $4.42 billion. Its non-GAAP profit of $1.36 per share was 17.5% above analysts' consensus estimates. Is now the time to buy Corebridge Financial? Find out in our full research report. Corebridge Financial (CRBG) Q2 CY2025 Highlights: Net Premiums Earned: $1.19 billion (6.5% year-on-year decline) Revenue: $4.42 billion vs analyst estimates of $4.12 billion (5.8% year-on-year growth, 7.3% beat) Pre-Tax Profit Margin: 21.3% (10.4 percentage point year-on-year increase) Adjusted EPS: $1.36 vs analyst estimates of $1.16 (17.5% beat) Market Capitalization: $19.12 billion Kevin Hogan, President and Chief Executive Officer, said, 'Corebridge delivered another quarter with very strong financial results and remains focused on driving shareholder value, as demonstrated by our variable annuity reinsurance transaction that further positions our company for the future. Company Overview Spun off from insurance giant AIG in 2022 to focus on the growing retirement market, Corebridge Financial (NYSE:CRBG) provides retirement solutions, annuities, life insurance, and institutional risk management products in the United States. Revenue Growth Big picture, insurers generate revenue from three key sources. The first is the core business of underwriting policies. The second source is income from investing the 'float' (premiums collected upfront not yet paid out as claims) in assets such as fixed-income assets and equities. The third is fees from various sources such as policy administration, annuities, or other value-added services. Regrettably, Corebridge Financial's revenue grew at a sluggish 3% compounded annual growth rate over the last five years. This was below our standard for the insurance sector and is a rough starting point for our analysis. Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. Corebridge Financial's performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 5.6% annually. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business. This quarter, Corebridge Financial reported year-on-year revenue growth of 5.8%, and its $4.42 billion of revenue exceeded Wall Street's estimates by 7.3%. Net premiums earned made up 42.3% of the company's total revenue during the last five years, meaning Corebridge Financial's growth drivers strike a balance between insurance and non-insurance activities. Net premiums earned commands greater market attention due to its reliability and consistency, whereas investment and fee income are often seen as more volatile revenue streams that fluctuate with market conditions. Today's young investors likely haven't read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next. Book Value Per Share (BVPS) Insurance companies are balance sheet businesses, collecting premiums upfront and paying out claims over time. The float – premiums collected but not yet paid out – are invested, creating an asset base supported by a liability structure. Book value captures this dynamic by measuring: Assets (investment portfolio, cash, reinsurance recoverables) - liabilities (claim reserves, debt, future policy benefits) BVPS is essentially the residual value for shareholders. We therefore consider BVPS very important to track for insurers and a metric that sheds light on business quality. While other (and more commonly known) per-share metrics like EPS can sometimes be lumpy due to reserve releases or one-time items and can be managed or skewed while still following accounting rules, BVPS reflects long-term capital growth and is harder to manipulate. Fortunately for investors, Corebridge Financial's BVPS grew at a solid 16.8% annual clip over the last two years. Key Takeaways from Corebridge Financial's Q2 Results We were impressed by how significantly Corebridge Financial blew past analysts' revenue expectations this quarter. We were also glad its EPS outperformed Wall Street's estimates. Zooming out, we think this was a good print with some key areas of upside. The stock remained flat at $34.79 immediately following the results. Corebridge Financial put up rock-solid earnings, but one quarter doesn't necessarily make the stock a buy. Let's see if this is a good investment. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it's free. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
San Francisco Chronicle
11 minutes ago
- San Francisco Chronicle
Company advised by Trump sons said it hoped to benefit from fed money, then took it back
NEW YORK (AP) — A public document filed by a company that just hired President Donald Trump's two oldest sons as advisers included a sentence early Monday that said it hoped to benefit from grants and other incentives from the federal government, which their father happens to lead. But when The Associated Press asked the Trump family business about the apparent conflict of interest, the document was revised and the line taken out. Eric Trump and Donald Trump Jr. are getting 'founder shares' worth millions of dollars in New America Acquisition 1 Corp., a company with no operating business that hopes to fill that hole by purchasing an American company that can play 'a meaningful role in revitalizing domestic manufacturing,' according to to the filing. The president has geared his trade policy toward boosting manufacturing in the U.S. The original version of the securities filing said the target company should be 'well positioned' to tap federal or state government incentives. That reference was taken out of the revised version of the filing. The Trump Organization didn't reply to a question about whether New America still planned to benefit from government programs or why the line was cut. But the outside law firm Paul Hastings that helped prepare the document sent an email to AP saying it was 'mistake' made by 'scriveners,' an old term for transcribers of legal papers. Kathleen Clark, an expert in government ethics, said any excuses are too late because the Trumps had already tipped their hand. 'They just deleted the language. They haven't committed not to do what they said earlier today they were planning to do," said the Washington University law professor and Trump critic. "It's an attempt to exploit public office for private profit.' New America is what's know as a special purpose acquisition company, or SPAC. It's a publicly traded company that exists solely to use its funds to acquire another company and take the target public. New America plans to raise money by selling stock on the New York Stock Exchange at $10 a share. That will hand the two Trump sons a total of $5 million in paper wealth on the first day of trading. The company hopes to sell enough shares to raise $300 million, which it then plans to use buying a yet unidentified manufacturer. A press release issued by New America saying it was focused on 'American values and priorities." It made no mention of the aim to get government incentives. The filing to New America's potential new investors to the Securities and Exchange Commission was explicit about what it was looking for in a target company. It said, among other things, it wanted a company that can ride 'public policy tailwinds" by benefiting from federal or state 'grants, tax credits, government contracts or preferential procurement programs.'
