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What Falling Estimates & Price Mean for Stoneridge (SRI)?

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 Stoneridge Inc. (SRI), 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 SRI.

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 76 cents a share a month ago to its current level of 59 cents.

Also, for the current quarter, Stoneridge has seen 1 downward estimate revision versus no revision in the opposite direction, dragging the consensus estimate down to 16 cents a share from 22 cents over the past 30 days.   

The stock also has seen some pretty dismal trading lately, as the share price has dropped 17.8% 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 electronic and miscellaneous components manufacturing sector, you may instead consider some better-ranked stocks including AAC Technologies Holdings Inc. (AACAY), KEMET Corp. (KEM) and TE Connectivity Ltd. (TEL). While AAC Technologies hold a Zacks Rank #1 (Strong Buy), KEMET and TE Connectivity holds a Zacks Rank #2 (Buy) and may be better selections at this time.

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STONERIDGE INC (SRI): Free Stock Analysis Report

AAC TEC HOLDINGS ADR (AACAY): Free Stock Analysis Report

KEMET CORP (KEM): Free Stock Analysis Report

TE CONNECTIVITY LTD (TEL): Free Stock Analysis Report

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