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Why Gigamon (GIMO) Could Be Positioned for a Slump

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 Gigamon Inc. (GIMO), 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 GIMO.

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. However, the consensus estimate trend has moved lower, as loss estimates widened from a loss of 33 cents a share a month ago to its current level of a loss of 54 cents.

Also, for the current quarter, Gigamon has seen 3 downward estimate revisions versus no revision in the opposite direction. However, consensus estimate trend has widened to a loss of 17 cents a share from a loss of 11 cents over the past 30 days.   

The stock also has seen some pretty dismal trading lately, as the share price has dropped 29.91% 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 Communications Components sector, you may instead consider some better-ranked stocks including Corning Inc. (GLW), Vocera Communications, Inc. (VCRA) and Plantronics, Inc. (PLT). While Corning and Vocera Communications carry a Zacks Rank #1 (Strong Buy), Plantronics carries a Zacks Rank #2 (Buy) and may be better selections at this time.

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GIGAMON INC (GIMO): Free Stock Analysis Report

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PLANTRONICS INC (PLT): Free Stock Analysis Report

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