Falling Earnings Estimates Signal Weakness Ahead for Grupo Financiero Santander - 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 Grupo Financiero Santander Mexico ( BSMX ) 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 #5 (Strong Sell) further confirms weakness in BSMX.

A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen 4 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 $1.06 a share a month ago to its current level of 93 cents.

Also, for the current quarter, Grupo Financiero Santander Mexico has seen 1 downward estimate revision versus no revision in the opposite direction, dragging the consensus estimate down to 21 cents a share from 25 cents over the past 30 days.   

The stock has also seen some pretty dismal trading lately, as the share price has dropped 19.3% 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 Foreign Banks sector, you may instead consider some better-ranked stocks including Shinhan Financial Group Company Limited ( SHG ), Barclays PLC ( BCS ), and Deutsche Bank AG ( DB ). While Shinhan Financial holds a Zacks Rank #1 (Buy), Barclays and Deutsche Bank hold a Zacks Rank #2. With favorable Zacks Ranks, these stocks may be better selections at this time.

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BARCLAY PLC-ADR (BCS): Free Stock Analysis Report

GRUPO FIN SANTR (BSMX): Free Stock Analysis Report

DEUTSCHE BK AG (DB): Free Stock Analysis Report

SHINHAN FIN-ADR (SHG): Get Free 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: BCS , BSMX , DB , SHG

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