Falling Earnings Estimates Signal Weakness Ahead for The Dixie Group (DXYN) - 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 The Dixie Group, Inc. ( DXYN ), 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 DXYN.

A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen 1 estimate moving down in the past 30 days, compared with no upward revisions. This trend has caused the consensus estimate to trend lower, going from 72 cents a share a month ago to its current level of 60 cents.

Also, for the current quarter, The Dixie Group has seen 1 downward estimate revision versus no revisions in the opposite direction, dragging the consensus estimate down to 3 cents a share from 22 cents over the past 30 days.   

The stock also has seen some pretty dismal trading lately, as the share price has dropped 24.3% 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 broader Consumer Product Discretionary sector, you may instead consider some better-ranked stocks including Prestige Brands Holdings, Inc. ( PBH ) and Summer Infant, Inc. ( SUMR ). These stocks hold a Zacks Rank #1 (Strong Buy).  Another well-placed stock is Zacks Ranked #2 (Buy) Nutrisystem, Inc. ( NTRI ). All these stocks may be better selections at this time.

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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

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