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Tale of the Tape

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 Walter Energy, Inc. (WLT - Analyst Report), 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 #4 (Sell) further confirms weakness in WLT.

A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen 5 estimates moving down in the past 30 days, compared with no upward revision. This trend has caused the loss estimate to widen, going from loss of $3.76 a share a month ago to its current level of loss of $4.29.

Also, for the current quarter, Walter Energy has seen 3 downward estimate revisions versus 1 revision in the opposite direction, dragging the consensus estimate down to loss of $1.30 from loss of $1.02 a share over the past 30 days.   

The stock also has seen some pretty dismal trading lately, as the share price has dropped 18.38% 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 Coal sector, you may instead consider some better-ranked stocks including Oxford Resource Partners, L.P. (OXF - Snapshot Report), Rhino Resource Partners LP (RNO - Snapshot Report) and Westmoreland Coal Co. (WLB). Among these stocks Oxford and Rhino hold a Zacks Rank #1 (Strong Buy) and Westmoreland holds a Zacks Rank #2 (Buy).  With favorable Zacks Ranks, these stocks may be better selections at this time.

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WALTER ENERGY INC (WLT - Analyst Report): Free Stock Analysis Report

OXFORD RESOURCE PARTNERS LP (OXF - Snapshot Report): Free Stock Analysis Report

RHINO RESOURCES INC (RNO - Snapshot Report): Free Stock Analysis Report

WESTMORELAND COAL CO (WLB): Free Stock Analysis Report


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