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Bear of the Day

In the wake of Trump’s 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 Sotheby’s 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 isn’t much better, including a bottom 25% industry rank. But it isn’t just the jarring industry outlook that is a problem for RLGY, as the company’s most recent earnings report also brought up some big questions.

Recent Earnings

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 aren’t big believers in RLGY’s near term potential, and it is hard to blame them considering the macro forces at play as well.

REALOGY HOLDING Price, Consensus and EPS Surprise

REALOGY HOLDING Price, Consensus and EPS Surprise | REALOGY HOLDING Quote


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.

Other Picks

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 Buy) instead.

Part of this is based on PMT’s stellar history in earnings season, while it doesn’t 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.

Beyond our Bear Stock of the Day, today's list of 220 Zacks Rank #5 Strong Sells demand even more urgent attention. If any are lurking in your portfolio or Watch List, you may want to consider removing them immediately. Many appear to be sound investments but, since 1988, such stocks have actually performed more than 11X worse than the S&P 500.



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