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Falling Earnings Estimates Signal Weakness Ahead for Exar Corp. (EXAR) - Tale of the Tape

Posted: 4/17/2014 8:43:00 AM
Referenced Stocks: AMD;EXAR;FSL;RMBS

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 Exar Corp. ( EXAR ), 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 (4 Sell) further confirms weakness in EXAR.

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 8 cents a share a month ago to its current level of 5 cents.

Also, for the current quarter, Exar Corp. has seen 1 downward estimate revisions versus mo revisions in the opposite direction, widening the consensus estimate to a loss of 5 cents a share from a loss of 2 cents over the past 30 days.   

The stock also has seen some pretty dismal trading lately, as the share price has dropped 11.5% 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 semiconductor sector, you may instead consider some better-ranked stocks including Advanced Micro Devices, Inc. ( AMD ), Freescale Semiconductor, Ltd. ( FSL ) and Rambus Inc. ( RMBS ). All these stocks hold a Zacks Rank #1 (Strong Buy) and may be better selections at this time.

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ADV MICRO DEV (AMD): Free Stock Analysis Report

EXAR CORP (EXAR): Free Stock Analysis Report

FREESCALE SEMI (FSL): Free Stock Analysis Report

RAMBUS INC (RMBS): Free Stock Analysis Report

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