Falling Earnings Estimates Signal Weakness Ahead for Gigamon (GIMO) - 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 Gigamon Inc. ( GIMO ), 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 GIMO. 

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 with just 1 upward revision. This trend has caused the consensus loss estimate to widen, going from a loss of 54 cents a share a month ago to its current level of loss of 62 cents.

Also, for the current quarter, Gigamon has seen 2 downward estimate revisions versus 1 revision in the opposite direction, widening the consensus loss estimate to a loss of 15 cents a share from a loss of 10 cents over the past 30 days.   

The stock also has seen some pretty dismal trading lately, as the share price has dropped 13.6% 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 Communications Components sector, you may instead consider some better-ranked stocks including 8x8 Inc. ( EGHT ) and Aerohive Networks, Inc. ( HIVE ) with Zacks Rank #2 (Buy). Investors interested in the broader Computer & Technology sector can consider AVX Corp. ( AVX ) with Zacks Rank #1(Strong Buy)and may be better selection at this time. 

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GIGAMON INC (GIMO): Free Stock Analysis Report

8X8 INC (EGHT): 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: GIMO , EGHT , HIVE , AVX

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