Bear of the Day: Atlantic Tele-Network (ATNI) - Bear of the Day

An image of stock prices rising and declining in value Credit: Shutterstock photo

The last two days have been what I like to call "Dartboard days." Meaning you could put a section of the Wall Street Journal up on a dartboard, throw a dart to pick a stock, and it will go up. A rising tide lifts all the boats. The news from the ECB has done just that. This tide is rising and these bats are up.

But what happens when all the pieces are there for a successful couple of days and your stock still isn't up? That may be a sign that something in wrong. Then if you have a stock that has had negative earnings revisions over the last several months on top of that, you really have to watch out. That's the story right now with our Bear of the Day, Atlantic Tele-Network ( ATNI ).

Headquartered in Beverly, MA Atlantic is a telecommunications company that provides service to under-served markets in North America and the Caribbean. Through their operating subsidiaries they provide both wireless and wireline connectivity to residential and business customers. The graphic below shows the markets in which the company operates.

ATNI is in an industry that ranks number 251 out of 265 in our Zacks Industry Rank. The company has struggled to find areas for growth and their earnings estimates have been reflecting that. In the last 60 days this Zacks Rank #5 (Strong Sell) has seen earnings estimate consensus for next year drop from $2.81 per share down to $2.67 and the current year down from $2.39 to $2.01.

Growth estimates for the current quarter show Atlantic's business contracting by 22.32% and next quarter by 3.17%. With earnings shrinking, estimates dropping, and contraction rather than growth you may want to avoid this stock right now.

I already brought up the fact that ATNI was down today but let's take a look at the technical picture to see if there is some saving grace from that perspective. Looking at the chart I find that the stock hadn't been doing so poorly until April. From last August through April ATNI had run up from $45 to $67. The strong technicals evident were a positively sloped 25 day moving average shifted by 5 days (25x5) and a stock locked in an uptrend.

Since then it has been a story of a different stock altogether. $67 is now a distant memory as the beginning of April marked the last time the stock traded that high. Two days pushed ATNI firmly below the 25x5 and into a downward spiral. Each support level along the way has been broken and now the stock trades around $54. The stochastics have been in extreme oversold condition the entire ride down and still remain that way.

With so many stocks heading up in this overheated market, it's hard to justify hanging on to this underperformer. Perhaps things can turn around in the future. Of the four stocks in this industry none of them carry anything higher than a Zacks Rank #3 (Hold).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

ATLANTIC TELE-N (ATNI): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More Related Articles

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.