Why Wright Medical (WMGI) Could Be Positioned for a Slump - 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 Wright Medical Group Inc. ( WMGI ), 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 WMGI.

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 revisions. This trend has caused the consensus estimate to trend lower, going from a loss of $1.25 a share a month ago to its current level of a loss of $1.43.

Also, for the current quarter, Wright Medical has seen 1 downward estimate revision versus no revisions in the opposite direction, dragging the consensus estimate down to a loss of 42 cents a share from a loss of 38 cents over the past 30 days.  

The stock also has seen some pretty dismal trading lately, as the share price has dropped 12.6% 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 medical products sector, you may instead consider some better-ranked stocks including Enzymotec Ltd. ( ENZY ), William Demant Holding A/S ( WILYY ) and Covidien plc ( COV ). While Enzymotec carries a Zacks Rank #1 (Strong Buy), Covidien and William Demant hold a Zacks Rank #2 (Buy).

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COVIDIEN PLC (COV): Free Stock Analysis Report

ENZYMOTEC LTD (ENZY): Free Stock Analysis Report

WILLIAM DEMANT (WILYY): Get Free Report

WRIGHT MEDICAL (WMGI): 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 , Investing Ideas , Stocks

Referenced Stocks: COV , ENZY , WILYY , WMGI

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