Falling Earnings Estimates Signal Weakness Ahead for Gastar Exploration (GST) - Tale of the Tape

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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 Gastar Exploration Inc. ( GST ) 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 GST.

A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen 2 estimates moving down in the past 30 days, compared to no upward revision. This trend has caused the consensus estimate to trend lower, going from earnings of 38 cents a share a month ago to its current level of 27 cents.

Also, for the current quarter, Gastar Exploration has seen 1 downward estimate revision versus 1 revision in the opposite direction, dragging the consensus estimate down to 6 cents per share from 3 cents a share over the past 30 days.   

The stock has also seen some pretty dismal trading lately, as the share price has dropped 18.0 % 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 Oil Exploration and Production industry, you may instead consider some better-ranked stocks including ARC Resources Ltd. ( AETUF ), Baytex Energy Corp. ( BTE ) and TransGlobe Energy Corporation ( TGA ). All these stocks carry a Zacks Rank #2 (Buy). With favorable Zacks Ranks, these stocks may be better selections at this time.

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ARC RESOURCES (AETUF): Get Free Report

BAYTEX ENERGY (BTE): Free Stock Analysis Report

GASTAR EXPL LTD (GST): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Earnings , Investing Ideas , Stocks

Referenced Stocks: AETUF , BTE , GST , TGA

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