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Tale of the Tape

Zacks Equity Research

Why Sonus Networks (SONS) Could Be Positioned for a Slump
November 25, 2016

SONS UBNT

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 Sonus Networks, Inc. (SONS - 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 #4 (Sell) further confirms weakness in SONS.

A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen 3 estimates moving down in the past 30 days, compared with no upward revision. This trend has caused the consensus estimate to trend lower, going from a loss of 1 cent a share a month ago to its current level of a loss of 11 cents.

Also, for the current quarter, Sonus Networks has seen 3 downward estimate revisions versus no revision in the opposite direction, dragging the consensus estimate down to a loss of 5 cents a share from earnings of 7 cents over the past 30 days.  

The stock also has seen some pretty dismal trading lately, as the share price has dropped 17.8% in the past month.

SONUS NETWORKS Price and Consensus

SONUS NETWORKS Price and Consensus | SONUS NETWORKS Quote

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 Wireless Equipment industry, you may instead consider a better-ranked stock - Ubiquiti Networks, Inc. (UBNT - Free Report) . The stock currently holds a Zacks Rank #1 (Strong Buy) and may be a better selection at this time. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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