Why Clarus Stock May Be a Dangerous Choice for Investors

Clarus Corp (NASDAQ:CLAR) is down 0.3% to trade at $22.20 this afternoon. The outdoor lifestyle concern has seen its fair share of volatility lately, slipping to a May 12, annual low of $18.92, after the $23.50 region turned down a rally earlier this month. The shares are also struggling with a ceiling at its 100-day moving average, which has been in place for most of 2022.

While the brokerage bunch is optimistic, with all eight analysts in coverage calling the stock a "buy" or better, short sellers have been building their positions. In fact, the 1.40 million shares sold short currently account for a significant 5.7% of the stock's available float, or over one week's worth of pent-up buying power.

Overall, Clarus stock currently does not offer an attractive investment opportunity from a valuation standpoint. CLAR trades at a forward price-earnings ratio of 24.88 and a price-sales ratio of 1.86, which are premium values for a small-cap company expected to see a significant reduction in their growth rate by 2023.

Although estimates have the outdoor products company increasing their revenues and earnings 25.9% and 19%, respectively, for 2022, CLAR is expected to grow its revenues just 8.7%, and experience a 1.7% decrease in earnings for 2023. What's more, Clarus holds $159.47 million in total debt, and only $19.46 million in cash, making it a liability for long-term investors’ portfolios.