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Why Farmer Bros. (FARM) Could Be Positioned for a Slump

Zacks Equity Research
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Will Best Buy (BBY) Beat Estimates Again in Its Next Earnings Report?

Best Buy (BBY) has an impressive earnings surprise history and currently possesses the right combination of the two key ingredients for a likely beat in its next quarterly report.

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 Farmer Bros. Co. FARM, 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 FARM.

A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen two 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 59 cents a share a month ago to its current level of a loss of $1.18.

Also, for the current quarter, Farmer Bros. has seen two downward estimate revisions versus no revisions in the opposite direction, dragging the consensus estimate down to 9 cents a share from 28 cents over the past 30 days.  

The stock also has seen some pretty dismal trading lately, as the share price has dropped 7.6% in the past month.

Farmer Brothers Company Price and Consensus

Farmer Brothers Company Price and Consensus | Farmer Brothers Company Quote

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 Food - Natural Foods Products industry, you may instead consider a better-ranked stock - Natural Grocers by Vitamin Cottage, Inc. NGVC. 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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