Falling Earnings Estimates Signal Weakness Ahead for XPO Logistics (XPO)

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 XPO Logistics, Inc. (XPO), 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 XPO.

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 30 days, compared with no upward revisions. This trend has widened the loss estimate per share to 42 cents now from loss per share estimate of 19 cents a month ago.

Also, for the current quarter XPO Logistics has seen 1 downward estimate revisions versus no revisions in the opposite direction, dragging the consensus estimate down a loss of 25 cents a share from a loss of 20 cents per share over the past 30 days.  

The stock also has seen some pretty dismal trading lately, as the share price has dropped 11.8% 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 transportation sector, you may instead consider some better-ranked stocks including American Airlines Group Inc. (AAL), Alaska Air Group, Inc. (ALK) and GATX Corp. (GMT). All these stocks hold a Zacks Rank #1 (Strong Buy) and may be better selections at this time.  

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XPO LOGISTICS INC (XPO): Free Stock Analysis Report

AMERICAN AIRLINES GROUP INC (AAL): Free Stock Analysis Report

ALASKA AIR GROUP INC (ALK): Free Stock Analysis Report

GATX CORP (GMT): Free Stock Analysis Report


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