In the wake of Trumps surprising victory, investors have seen incredible volatility in a number of market sectors. One area that has been on the move more
than others is the world of real estate.
That is because interest rates are soaring in anticipation of some inflationary policies from Trump (including a burst of new spending), while some think
that foreign holders of Treasury bonds may be reducing their positions as well. Either way, this has pushed the 10-year yield to within striking distance
of its 52 week high, hurting the appeal of housing and real estate markets in the process.
While this has obviously hit companies in the high dividend area of the real estate world, those in the services side of the market could also be impacted.
Lower home sales or a more difficult housing market could definitely impact companies like Realogy Holdings ( (RLGY - Free Report) and force these companies lower in the process.
RLGY in Focus
RLGY provides real estate and relocation services across the globe. This is done via a number of real estate brands, including pretty well-known ones such
as Century 21, Coldwell Banker, and Sothebys International Realty to name a few.
The company could be under pressure if the housing market faces turmoil in the near term, while the sector outlook isnt much better, including a bottom
25% industry rank. But it isnt just the jarring industry outlook that is a problem for RLGY, as the companys most recent earnings report also brought up
some big questions.
In the latest report, RLGY missed earnings estimates for the second time in a row, posting 74 cents a share in earnings compared to expectations of 76
cents per share. Additionally, the most recent estimates for RLGY earnings have come in below previous expectations, as we have seen two estimates go lower
for the current quarter in the past week, and one lower for the full year time frame too.
In fact, if we look at the most accurate estimate and compare it to the consensus from 30 days ago, the current quarter expectations have fallen by over
25%, while the full year and next year periods have also trended lower. Clearly, analysts arent big believers in RLGYs near term potential, and it is
hard to blame them considering the macro forces at play as well.
No wonder shares currently have a Zacks Rank #5 (Strong Sell), and why we are looking for more underperformance from this company in the near future.
While the overall segment might not be great right now, there is still hope for investors. Pennymac Mortgage ( (PMT - Free Report) also operates in the real estate operations industry, but it has earned a Zacks Rank #1 (Strong
Part of this is based on PMTs stellar history in earnings season, while it doesnt hurt that analyst estimates have also been moving higher for the
company as well. So, if you are looking for a pick in this corner of the real estate market, it might be a good idea to take a closer look at PMT instead
of RLGY, at least until Realogy can turn around its earnings estimate picture and post some solid numbers on that front.
More Stocks to Sell. Now.
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