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 Kratos Defense & Security Solutions, Inc. (KTOS), 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 KTOS.
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 revision. This trend has caused the consensus estimate to trend lower, going from a gain of 19 cents a share a month ago to its current loss of $1.35.
Also, for the current quarter, Kratos has seen 1 downward estimate revision versus no revision in the opposite direction, dragging the consensus estimate down to a loss of 4 cents a share from a gain of 27 cents over the past 30 days.
The stock also has seen some pretty dismal trading lately, as the share price has dropped 22.6% 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 Aerospace/Defense Equipment industry, you may instead consider some better-ranked stocks including Spirit AeroSystems Holdings, Inc. (SPR), Teledyne Technologies Inc. (TDY) and Esterline Technologies Corp. (ESL). While both Spirit AeroSystems and Teledyne Technologies hold a Zacks Rank #1 (Strong Buy), Esterline Technologies holds a Zacks Rank #2 (Buy), and may be better selections at this time.
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