Similar to wise buying decisions, exiting certain underperformers at the right time helps maximize portfolio returns. Selling off losers can be difficult, but if both the share price and estimates are falling, it could be time to get rid of the security before more losses hit your portfolio.
One such stock that you may want to consider dropping is Education Management Corporation ( EDMC ), which has witnessed a significant price decline in the past four weeks, and it has seen negative earnings estimate revisions for the current quarter and the current year. A Zacks Rank #4 (Sell) further confirms weakness in EDMC.
A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen 7 estimates moving down in the past 30 days, compared with no upward revision. This trend has caused the consensus estimate to trend lower, going from 25 cents a share a month ago to its current level of 19 cents.
Also, for the current quarter, Education Management has seen 5 downward estimate revisions versus no revision in the opposite direction, dragging the consensus estimate down to 14 cents a share from 21 cents over the past 30 days.
The stock also has seen some pretty dismal trading lately, as the share price has dropped 23.26% in the past month.
So it may not be a good decision to keep this stock in your portfolio anymore, at least if you don't have a long time horizon to wait.
If you are still interested in the Consumer Discretionary sector, you may instead consider some better-ranked stocks including Strayer Education Inc. ( STRA ), Career EducationCorp. ( CECO ) and New Oriental Education & Technology Group Inc. ( EDU ) Among these stocks Strayer Education holds a Zacks Rank #1 (Strong Buy) and Career Education and New Oriental hold a Zacks Rank #2 (Buy). With favorable Zacks Ranks, these stocks may be better selections at this time.
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CAREER EDU CORP (CECO): Free Stock Analysis Report
EDUCATION MANAG (EDMC): Free Stock Analysis Report
NEW ORIENTAL ED (EDU): Free Stock Analysis Report
STRAYER EDUC (STRA): Free Stock Analysis Report
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