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Why Controladora Vuela Compa (VLRS) Could Be Positioned for a Slump? - Tale of the Tape

By: Zacks.com
Posted: 4/1/2014 8:47:00 AM
Referenced Stocks: AAL;ALK;ICAGY;VLRS

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 Controladora Vuela Compa ( VLRS ), 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 VLRS.

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 64 cents a share a month ago to its current level of 49 cents.

Also, for the current quarter, VLRS has seen 1 downward estimate revision versus no revision in the opposite direction, dragging the consensus estimate down to loss of 5 cents a share from break even over the past 30 days.   

The stock also has seen some pretty dismal trading lately, as the share price has dropped 11.26% 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 Trans-Airline industry, you may instead consider some better-ranked stocks including American Airlines Group Inc. ( AAL ), Alaska Air Group, Inc. ( ALK ) and International Consolidated Airlines Group, S.A. ( ICAGY ).All these stocks hold a and may be better selections at this time.

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AMER AIRLINES (AAL): Free Stock Analysis Report

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CONTROLADORA VL (VLRS): Free Stock Analysis Report

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