Falling Earnings Estimates Signal Weakness Ahead for FX Energy (FXEN) – Tale of the Tape

ZacksSimilar 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 FX Energy Inc. (FXEN), 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 (Sell) further confirms weakness in FXEN.

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 60 days, compared with no upward revision. This has caused the consensus estimate for loss to widen, as loss estimates widened from a loss of 4 cents a share two months ago to its current level of a loss of 13 cents

Also, for the current quarter, FX Energy has seen 1 downward estimate revision versus no revision in the opposite direction. The consensus estimate trend widened to a loss of 10 cents a share from a loss of 3 cents over the past 60 days.

The stock also has seen some pretty dismal trading lately, as the share price has dropped 10.36% 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 Independent Oil and Gas sector, you may instead consider some better-ranked stocks including Cairn Energy plc (CRNCY) and Kosmos Energy Ltd. (KOS) with Zacks Ranks #2 (Buy). Investors interested in the broader Energy sector can consider Alliance Resource Partners LP (ARLP) carrying a Zacks Rank #1 (Strong Buy).

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