Back to top

Image: Bigstock

Why KAR Auction Services (KAR) Could Be Positioned for a Slump

Read MoreHide Full Article

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 KAR Auction Services, Inc. (KAR - 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 KAR.

A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen five estimates moving down in the past 30 days, compared with no upward revisions. This trend has caused the consensus estimate to trend lower, going from $2.93 a share a month ago to its current level of $1.27.

Also, for the current quarter, KAR Auction Services has seen four downward estimate revisions versus no revisions in the opposite direction, dragging the consensus estimate down to 40 cents a share from 86 cents over the past 30 days.   

The stock also has seen some pretty dismal trading lately, as the share price has dropped 59.2% in the past month.

KAR Auction Services, Inc Price and Consensus

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 - Miscellaneous industry, you may instead consider a better-ranked stock - Hibbett Sports, Inc. (HIBB - 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 stocks here.

Breakout Biotech Stocks with Triple-Digit Profit Potential

The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.

Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.

See these 7 breakthrough stocks now>>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Hibbett, Inc. (HIBB) - free report >>

OPENLANE, Inc. (KAR) - free report >>

Published in