What Falling Estimates & Price Mean for YuMe Inc. (YUME)

Zacks Equity Research
June 4, 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 YuMe, Inc. (YUME), 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 YUME.

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 revision. This trend has caused the consensus estimate to trend lower, going from a loss of 8 cents a share a month ago to its current level loss of 15 cents.

Also, for the current quarter, YuMe has seen 1 downward estimate revision versus no revision in the opposite direction, widening the consensus estimate down to a loss of 13 cents a share from a loss of 9 cents over the past 30 days.   

The stock also has seen some pretty dismal trading lately, as the share price has dropped 21.7% 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 Advertising and Marketing Services sector, you may instead consider some better-ranked stocks including Coupons.com Incorporated (COUP) and Sizmek Inc. (SZMK). These stocks currently hold a Zacks Rank #2 (Buy).  You may also consider Viad Corp. (VVI) from the broader Business Services sector as the stock carries a Zacks Rank #2 (Buy). All these stocks may be better selections at this time.

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