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 Taro Pharmaceutical Industries Ltd. (TARO - 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 TARO.
A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen one estimate moving down in the past 30 days, compared with no upward revisions. This trend has caused the consensus estimate to trend lower, going from $9.67 a share a month ago to its current level of $7.65.
Also, for the current quarter, Taro Pharmaceutical has seen one downward estimate revision versus no revisions in the opposite direction, dragging the consensus estimate down to $1.96 a share from $2.36 over the past 30 days.
The stock also has seen some pretty dismal trading lately, as the share price has dropped 9.8% in the past month.
Taro Pharmaceutical Industries Ltd. Price and Consensus