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What Makes Layne Christensen (LAYN) a Strong Sell?

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 Layne Christensen Company  (LAYN) 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 LAYN.

A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen 3 estimates moving down in the past 30 days, compared with no upward revision. This trend has caused the consensus estimate to trend lower, going from 13 cents a share a month ago to its current level of a loss of $1.94.

Also, for the current quarter, Layne Christensen has seen 3 downward estimate revisions versus no revision in the opposite direction, dragging the consensus estimate down to a loss of 48 cents a share from 3 cents over the past 30 days.   

The stock also has seen some pretty dismal trading lately, as the share price has dropped 12.8% 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 broader Industrial Products sector, you may instead consider some better-ranked stocks including Willdan Group, Inc. (WLDN), Quanta Services, Inc. (PWR) and Gorman-Rupp Corp. (GRC). While Willdan Group and Gorman-Rupp hold a Zacks Rank #1 (Strong Buy), Quanta Services holds a Zacks Rank #2 (Buy) and may be better selections at this time.

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LAYNE CHRISTENSEN CO (LAYN): Free Stock Analysis Report

WILLDAN GROUP INC (WLDN): Free Stock Analysis Report

QUANTA SERVICES INC (PWR): Free Stock Analysis Report

GORMAN RUPP CO (GRC): Free Stock Analysis Report

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