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Weakness Seen in Demand Media (DMD) Estimates: Should You Stay Away? - Tale of the Tape
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 Demand Media, Inc. ( DMD ) 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 DMD.
A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen 4 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 5 cents a share a month ago to its current level of a loss of 17 cents.
Also, for the current quarter, Demand Media has seen 2 downward estimate revisions versus no revisions in the opposite direction, dragging the consensus estimate down 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 17.7% 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 technology sector, you may instead consider some better-ranked stocks including China Distance Education Holdings Limited ( DL ), Giant Interactive Group, Inc. ( GA ) and Global Eagle Entertainment Inc. ( ENT ). All these stocks carry a Zacks Rank #2 (Buy) and may be better selections at this time.
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CHINA DISTANCE (DL): Free Stock Analysis Report
DEMAND MEDIA (DMD): Free Stock Analysis Report
GLOBAL EAGL ENT (ENT): Free Stock Analysis Report
GIANT INTERACTV (GA): Free Stock Analysis Report
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