Falling Earnings Estimates Signal Weakness Ahead for ServiceSource International (SREV) – Tale of the Tape

Zacks

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 ServiceSource International, Inc. (SREV) 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(Sell) further confirms weakness in SREV.

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 revisions. This trend has caused the consensus estimate to trend lower, going from a loss of 26 cents a share a month ago to its current level of a loss of 37 cents per share.

Also, for the current quarter, ServiceSource International has seen 1 downward estimate revision versus no revisions in the opposite direction, dragging the consensus estimate down to a loss of 11 cents a share from a loss of 8 cents over the past 30 days.

The stock also has seen some pretty dismal trading lately, as the share price has dropped 32.4% 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 Blackbaud Inc. (BLKB), Citrix Systems, Inc. (CTXS) and Manhattan Associates, Inc. (MANH). All these stocks holds a Zacks Rank #1 (Strong Buy) and may be better selections at this time.

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 >>

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

To read this article on Zacks.com click here.

Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.

Be the first to comment

Leave a Reply