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Tale of the Tape

Zacks Equity Research

What Falling Estimates & Price Mean for Braskem S.A. (BAK)?
February 11, 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 Braskem S.A. (BAK - Free 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 BAK.

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 to 1 upward revision. This trend has caused the consensus estimate to trend lower, going from 63 cents a share a month ago to its current level of 54 cents.

Also, for the current quarter, Braskem has seen 2 downward estimate revisions versus no revision in the opposite direction, dragging the consensus estimate to loss of 3 cents a share from earnings per share of 16 cents over the past 30 days. 
The stock also has seen some pretty dismal trading lately, as the share price has dropped 11.0% 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 Major Integrated Oil & Gas sector, you may instead consider some better-ranked stocks including YPF S.A. (YPF - Free Report) , Total SA (TOT - Free Report) and OMV Aktiengesellschaft (OMVJF - Free Report) .While YPF holds a Zacks Rank #1 (Strong Buy) , Total and OMV carry a Zacks Rank #2 (Buy).With favorable Zacks Ranks, these stocks may be better selections at this time.

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