What Makes Walter Energy (WLT) a Strong Sell? - Tale of the Tape
April 15 2014 - 8:59AM
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
Walter Energy, Inc. (WLT), 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 WLT.
A key reason for this move has been the negative trend in earnings
estimate revisions. For the full year, we have seen 5 estimates
moving down in the past 30 days, compared with no upward revision.
This trend has caused the loss estimate to widen, going from loss
of $3.76 a share a month ago to its current level of loss of
$4.29.
Also, for the current quarter, Walter Energy has seen 3 downward
estimate revisions versus 1 revision in the opposite direction,
dragging the consensus estimate down to loss of $1.30 from loss of
$1.02 a share over the past 30 days.
The stock also has seen some pretty dismal trading lately, as the
share price has dropped 18.38% 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 Coal sector, you may instead
consider some better-ranked stocks including Oxford
Resource Partners, L.P. (OXF), Rhino Resource
Partners LP (RNO) and Westmoreland Coal
Co. (WLB). Among these stocks Oxford and Rhino hold a
Zacks Rank #1 (Strong Buy) and Westmoreland holds a Zacks Rank #2
(Buy). With favorable Zacks Ranks, these stocks may be better
selections at this time.
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