Weakness Seen in OM Group (OMG) Estimates: Should You Stay Away? - 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 OM Group Inc. ( OMG ) 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 OMG.

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 no upward revision. This trend has caused the consensus estimate to trend lower, going from $1.36 a share a month ago to its current level of $1.14.

Also, for the current quarter, OM Group has seen 2 downward estimate revisions versus no revision in the opposite direction, dragging the consensus estimate down to 33 cents a share from 39 cents over the past 30 days.   

The stock also has seen some pretty dismal trading lately, as the share price has dropped 20.6% 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 Specialty Chemicals industry, you may instead consider some better-ranked stocks including NewMarket Corporation ( NEU ), Ecolab Inc. ( ECL ) and BioAmber Inc. ( BIOA ), each carrying a Zacks Rank #2 (Buy). With favorable Zacks Ranks, these stocks may be better selections at this time.

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OM GROUP INC (OMG): Free Stock Analysis Report

NEWMARKET CORP (NEU): Free Stock Analysis Report

ECOLAB INC (ECL): Free Stock Analysis Report

BIOAMBER INC (BIOA): 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 , Investing Ideas , Stocks

Referenced Stocks: OMG , NEU , ECL , BIOA

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