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Why PMFG, Inc. (PMFG) 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 PMFG, Inc. (PMFG) 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 PMFG.

A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen 2 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 earnings of 9 cents a share a month ago to loss of 13 cents now.

Also, for the current quarter, PMFG has seen 2 downward estimate revisions versus no revision in the opposite direction, dragging the consensus estimate down to 5 cents a share from earnings per share of 10 cents over the past 30 days.   

The stock also has seen some pretty dismal trading lately, as the share price has dropped 15.5% 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 Pollution Control sector, you may instead consider some better-ranked stocks including Sharps Compliance Corp. (SMED), Tetra Tech Inc. (TTEK) and Heritage-Crystal Clean, Inc (HCCI). While Sharps Compliance holds a Zacks Rank #1 (Strong Buy) , Tetra Tech and Heritage-Crystal carry a Zacks Rank #2 (Buy). With favorable Zacks Ranks, these stocks may be better selections at this time.

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PMFG INC (PMFG): Free Stock Analysis Report

SHARPS COMPLIANCE CORP (SMED): Free Stock Analysis Report

TETRA TECH INC (TTEK): Free Stock Analysis Report


Zacks Investment Research