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Bear Of The Day: QuinStreet Inc (QNST)

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QuinStreet Inc (QNST - Free Report) is a Zacks Rank #5 (Strong Sell) as we head into a recession.  Why do I mention the recession?  Well generally we see the service related stocks take it on the chin first… and more to that point the service related stocks that are in the advertising space. This article will look at why this stock is a Zacks Rank #5 (Strong Sell) in this Bear of the Day article.

Description

QuinStreet Inc, is a provider of online direct marketing and media services. The Company offers online messaging, email broadcasting, search engine marketing, and brand management services. It caters to education, financial services, healthcare, advertising, and tourism sectors. QuinStreet, Inc. also operates web portal which offers comprehensive consumer information service and companion insurance brokerage service to self-directed insurance shoppers. The Company vigilantly manages brand and regulatory compliance using proprietary technologies and staff. It does not support or use spyware, spam, or promotions that cheat customers. QuinStreet Inc. is headquartered in Foster City, California.

Earnings History

When I look at a stock, the first thing I do is look to see if the company is beating the number.  This tells me right away where the market’s expectations have been for the company and how management has communicated to the market.  A stock that consistently beats has management communicating expectations to Wall Street that can be achieved.  That is what you want to see.

In the case of QNST, I see two meets of the  Zacks Consensus Estimate and two misses.  This alone does not make the stock a Zacks Rank #1 (Strong Buy) and it doesn’t make it a Zacks Rank #5 (Strong Sell) either.

The Zacks Rank does care about the earnings history, but it is much more heavily influenced by the movement of earnings estimates.

Earnings Estimates

The Zacks Rank tells us which stocks are seeing earnings estimates move higher or in this case lower.  For QNST see annual estimates moving lower.

The current fiscal year consensus number moved from $0.56  to $0.29 over the last 60 days.

The next year has moved from $0.75 to and NA.

That NA could be due to the loss of coverage or a change in analysts that cover this stock.

Negative movement in earnings estimates like that is why this stock is a Zacks Rank #5 (Strong Sell).

It should be noted that a majority of stocks in the Zacks universe are seeing negative earnings estimate revisions.  That means that the stocks that are seeing small but negative earnings estimate revisions are falling to a Zacks Rank #5 (Strong Sell).


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