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Falling Earnings Estimates Signal Weakness Ahead for InterOil Corporation (IOC)

Zacks Equity Research

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 InterOil Corporation (IOC), 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 IOC.

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 has caused the consensus estimate for loss to widen, as loss estimates widened from a loss of 14 cents a share a month ago to its current level of a loss of 82 cents.

Also, for the current quarter, InterOil Corporation has seen no estimate revision in either direction, dragging the consensus estimate down to 4 cents a share from 11 cents over the past 30 days.   

The stock also has seen some pretty dismal trading lately, as the share price has dropped 12.09% 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 Oil-Energy sector, you may instead consider some better-ranked stocks including Cameron International Corporation (CAM), CNOOC Ltd. (CEO) and Canadian Oil Sands Limited (COSWF). All these stocks hold a Zacks Rank #1 (Strong Buy) and may be better selections at this time.

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INTEROIL CORP (IOC): Free Stock Analysis Report


CNOOC LTD (CEO): Free Stock Analysis Report

CANADIAN OIL SANDS (COSWF): Free Stock Analysis Report

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