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.

Accurately determining a company’s long-term prospects isn’t easy, especially when sentiment is weak. That’s where StockStory comes in - to help you find attractive investment candidates backed by unbiased research. That said, here are three stocks where the outlook is warranted and some alternatives with better fundamentals.

Dillard's (DDS)

Consensus Price Target: $537 (-12% implied return)

With stores located largely in the Southern and Western US, Dillard’s (NYSE: DDS) is a department store chain that sells clothing, cosmetics, accessories, and home goods.

Why Does DDS Give Us Pause?

1. Failure to add new stores points to soft demand and a focus on boosting sales at current locations
2. Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
3. Earnings per share have dipped by 8.9% annually over the past three years, which is concerning because stock prices follow EPS over the long term

Dillard’s stock price of $610.10 implies a valuation ratio of 18.1x forward P/E. To fully understand why you should be careful with DDS, check out our full research report (it’s free).

Illinois Tool Works (ITW)

Consensus Price Target: $274.54 (6.7% implied return)

Founded by Byron Smith, an investor who held over 100 patents, Illinois Tool Works (NYSE: ITW) manufactures engineered components and specialized equipment for numerous industries.

Why Are We Cautious About ITW?

1. Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
2. Estimated sales growth of 3.1% for the next 12 months is soft and implies weaker demand
3. Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 3.1% annually

At $257.42 per share, Illinois Tool Works trades at 22.4x forward P/E. If you’re considering ITW for your portfolio, see our FREE research report to learn more.

Horace Mann Educators (HMN)

Consensus Price Target: $52 (6.4% implied return)

Founded in 1945 and named after the 19th-century education reformer known as the "father of American public education," Horace Mann Educators (NYSE: HMN) is an insurance company that specializes in providing auto, property, life, and retirement products tailored for educators and other public service employees.

Why Are We Out on HMN?

1. Net premiums earned expanded by 6.2% annually over the last five years, falling below our expectations for the insurance sector
2. Policy losses and capital returns have eroded its book value per share this cycle as its book value per share declined by 2.3% annually over the last five years
3. ROE of 6.8% reflects management’s challenges in identifying attractive investment opportunities

Horace Mann Educators is trading at $48.87 per share, or 1.3x forward P/B. Check out our free in-depth research report to learn more about why HMN doesn’t pass our bar.

High-Quality Stocks for All Market Conditions

WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.

But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.

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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.