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 Exxon Mobil Corporation XOM, 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 XOM.
A key reason for this move has been the negative trend in earnings estimates revisions. For the full year, we have seen six estimates moving down in the past 60 days, compared with one upward revision. This trend has caused the consensus estimate to trend lower, going from $4.84 a share a month ago to its current level of $4.68 a share.
Also, for the current quarter, Exxon Mobil has seen four downward estimate revision versus no revisions in the opposite direction, dragging the consensus estimate down to $1.20 a share from $1.37 over the past 60 days.
The stock has also seen some pretty dismal trading lately, as the share price has dropped 9.2% in the past month.
Exxon Mobil Corporation Price and Consensus
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 Oil and Energy sector, you may instead consider a better-ranked stock – Warrior Met Coal Inc. HCC. The stock currently holds a Zacks Rank #1 (Strong Buy) and may be a better selection at this time. You can see the complete list of today’s Zacks #1 Rank stocks here.
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