Falling Earnings Estimates Signal Weakness Ahead for Iao Kun (IKGH) - 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 Iao Kun Group Holding Company Limited ( IKGH ), 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 IKGH.
A key reason for this move has been the negative trend in earnings estimate revisions. While the company has witnessed no estimates revision in either side for the full year in the past 30 days, the consensus estimate move lower from 25 cents a share a month ago to its current level of 11 cents per share.
Also, for the current quarter, Iao Kun has seen 1 downward estimate revision versus no revisions in the opposite direction, dragging the consensus estimate down to a loss of 5 cents a share from the gain of 5 cents over the past 30 days.
The stock also has seen some pretty dismal trading lately, as the share price has dropped 27% 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 Consumer Discretionary sector, you may instead consider some better-ranked stocks including 500.com Limited ( WBAI ), Bridgepoint Education, Inc. ( BPI ) and Culp, Inc. ( CFI ). All these stocks hold a Zacks Rank #2 (Buy) and may be better selections at this time.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.