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Why Chico's (CHS) Could Be Positioned for a Slump
March 28, 2014
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 Chico's FAS Inc. ( CHS - 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 CHS.
A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen 13 estimates moving down in the past 30 days, with no upward revision. This trend has caused the consensus estimate to trend lower, going from $1.17 a share a month ago to its current level of 97 cents.
Also, for the current quarter, Chico's has seen 10 downward estimate revisions versus no revision in the upside, dragging the consensus estimate down to 32 cents a share from 36 cents over the past 30 days.
The stock also has seen some pretty dismal trading lately, as the share price has dropped 12% 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 Retail-Wholesale sector, you may instead consider some better-ranked stocks including American Apparel, Inc. , Belle International Holdings Limited ( BELLY - Snapshot Report) and Esprit Holdings Ltd. . All these of these carry a Zacks Rank #2 (Buy) and may be better selections at this time.
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