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Falling Earnings Estimates Signal Weakness Ahead for Intermolecular (IMI)

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 Intermolecular, Inc. (IMI), 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 IMI.

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 7 cents a share a month ago to its current level of a loss of $0.48.

Also, for the current quarter, Intermolecular has seen 1 downward estimate revisions versus no revisions in the opposite direction, dragging the consensus estimate down to a loss of 19 cents a share from a loss of 3 cents over the past 30 days.     

The stock also has seen some pretty dismal trading lately, as the share price has dropped 10.3% 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 technology sector, you may instead consider some better-ranked stocks including AU Optronics Corp. (AUO), Maxwell Technologies, Inc. (MXWL) and Nidec Corporation (NJ). All these stocks hold a Zacks Rank #1 (Strong Buy) and may be better selections at this time.

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INTERMOLECULAR INC (IMI): Free Stock Analysis Report

AU OPTRONICS CORP (AUO): Free Stock Analysis Report

MAXWELL TECH INC (MXWL): Free Stock Analysis Report

NIDEC CORP ADR (NJ): Free Stock Analysis Report

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