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Tale of the Tape

Zacks Equity Research

Weakness Seen in ServiceSource International (SREV) Estimates: Should You Stay Away?
August 08, 2014


Trades from $3
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 ServiceSource International, Inc. (SREV - Snapshot 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 #5 (Strong Sell) further confirms weakness in SREV.    

A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen 1 estimate moving down in the past 30 days, compared with no upward revisions. This trend has caused the consensus loss estimates to trend higher, going from a loss of 37 cents a share a month ago to its current level of a loss of 59 cents per share.

Also, for the current quarter, ServiceSource International has seen 1 downward estimate revision versus no revisions in the opposite direction, pushing the consensus loss estimate up to 18 cents a share from a loss of 8 cents over the past 30 days.  
The stock also has seen some pretty dismal trading lately, as the share price has dropped 34.3% 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 technology sector, you may instead consider some better-ranked stocks including Citrix Systems, Inc. (CTXS - Analyst Report), Callidus Software Inc. (CALD - Snapshot Report) and ACI Worldwide, Inc. (ACIW - Snapshot Report).  All these stocks carry a Zacks Rank #2 (Buy) and may be better selections at this time.      

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