Weakness Seen in Elizabeth Arden (RDEN) Estimates: Should You Stay Away?


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 Elizabeth Arden, Inc. (RDEN), 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 #5 (Strong Sell) further confirms weakness in RDEN.

A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen 4 estimates moving down in the past 30 days, compared with no upward revisions. This trend has caused the consensus estimate to trend lower, going from $1.46 a share a month ago to its current level of 28 cents.

Also, for the current quarter, Elizabeth Arden has seen downward estimate revisions versus no revision in the opposite direction, dragging the consensus estimate down to a loss of 20 cents a share from an earnings of 13 cents over the past 30 days.   

The stock also has seen some pretty dismal trading lately, as the share price has dropped 29.3% 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 Cosmetics sector, you may instead consider some better-ranked stocks including Coty Inc. (COTY) and Shiseido Company, Limited (SSDOY). One can also consider Unilever plc (UL) from the broader Consumer Staples industry.  While COTY sports a Zacks Rank #1 (Strong Buy), SSDOY and UL hold a Zacks Rank #2 (Buy).

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ELIZABETH ARDEN INC (RDEN): Free Stock Analysis Report

COTY INC (COTY): Free Stock Analysis Report

SHISEIDO CO LTD SPON (SSDOY): Free Stock Analysis Report

UNILEVER PLC (UL): Free Stock Analysis Report

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