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 ITT Educational Services Inc. (ESI), 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 ESI.
A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen 8 estimates moving down in the past 30 days, compared with 1 upward revision. This trend has caused the consensus estimate to trend lower, going from $3.10 a share a month ago to its current level of $2.61.
Also, for the current quarter, ITT Educational Services has seen 2 downward estimate revisions versus 1 revision in the opposite direction, while the consensus estimate has stayed unchanged at 71 cents over the past 30 days.
The stock also has seen some pretty dismal trading lately, as the share price has dropped 34.3% 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 Schools industry, you may instead consider some better-ranked stocks including Grand Canyon Education, Inc. (LOPE), DeVry Education Group Inc. (DV) and Strayer Education Inc. (STRA), each carrying a Zacks Rank #2 (Buy). With favorable Zacks Ranks, these stocks may be better selections at this time.
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ITT EDUCATIONAL SERVICES INC (ESI): Free Stock Analysis Report
DEVRY EDUCATION GROUP INC (DV): Free Stock Analysis Report
STRAYER EDUCATION INC (STRA): Free Stock Analysis Report
GRAND CANYON EDUCATION INC (LOPE): Free Stock Analysis Report
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