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Falling Earnings Estimates Signal Weakness Ahead for Ferroglobe (GSM)

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 Ferroglobe PLC GSM, 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 GSM.

A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen four 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 a loss of 52 cents a share a month ago to its current level of a loss of 59 cents.

The stock also has seen some pretty dismal trading lately, as the share price has dropped 12.1% 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.

Ferroglobe PLC Price and Consensus

Ferroglobe PLC Price and Consensus

Ferroglobe PLC price-consensus-chart | Ferroglobe PLC Quote

If you are still interested in the Chemical - Specialty industry, you may instead consider a better-ranked stock - American Vanguard Corporation AVD. The stock currently holds a Zacks Rank #2 (Buy) and may be a better selection at this time. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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