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Weakness Seen in Francesca's Holdings (FRAN) Estimates: Should You Stay Away?

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 Francesca's Holdings Corporation (FRAN), 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 FRAN.

A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen 10 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 $1.22 a share a month ago to its current level of $1.09.

Also, for the current quarter, Francesca's Holdings has seen 10 downward estimate revisions versus no revision in the opposite direction, dragging the consensus estimate down to 27 cents a share from 36 cents over the past 30 days.   

The stock also has seen some pretty dismal trading lately, as the share price has dropped 10.26% 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 Shoes & Apparel sector, you may instead consider some better-ranked stocks including Skechers USA (SKX), Rocky Brands, Inc. (RCKY) and Carter's, Inc. (CRI) .While Skechers USA carries a Zacks Rank #1 (Strong Buy), Rocky Brands and Carter's carry a Zacks Rank #2 (Buy) and may be better selections at this time.

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FRANCESCA'S HOLDINGS CORP (FRAN): Free Stock Analysis Report

SKECHERS USA INC (SKX): Free Stock Analysis Report

ROCKY BRANDS INC (RCKY): Free Stock Analysis Report

CARTER INC (CRI): Free Stock Analysis Report

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