Falling Earnings Estimates Signal Weakness Ahead for Black Diamond (BDE)

Zacks Equity Research
August 14, 2014

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 Black Diamond, Inc. (BDE), 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 BDE.

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 to no upward revision. This trend has caused the consensus estimate to trend lower, going from earnings of 1 penny a share a month ago to its current level of a loss of 2 cents.

Also, for the current quarter, Black Diamond has seen 4 downward estimate revisions versus no revision in the opposite direction, dragging the consensus estimate down to break-even level from earnings of 4 cents a share over the past 30 days.   

The stock has also seen some pretty dismal trading lately, as the share price has dropped 24.5% 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 Leisure Services industry, you may instead consider some better-ranked stocks including Malibu Boats, Inc. (MBUU), Marine Products Corp. (MPX) and Polaris Industries Inc. (PII), each carrying a Zacks Rank #2 (Buy). With favorable Zacks Ranks, these stocks may be better selections at this time.

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BLACK DIAMOND INC (BDE): Free Stock Analysis Report

MALIBU BOATS CL A (MBUU): Free Stock Analysis Report

MARINE PRODUCTS CORP (MPX): Free Stock Analysis Report

POLARIS INDUSTRIES INC (PII): Free Stock Analysis Report

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