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What Makes Centennial Resource (CDEV) a Strong Sell?

Zacks Equity Research

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 Centennial Resource Development, Inc. CDEV, 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 CDEV.

A key reason for this move has been the negative trend in earnings estimates revisions. For the full year, we have seen five estimates moving down in the past 60 days, compared with one upward revision. This trend has caused the consensus estimate to trend lower, going from 92 cents a share two months ago to its current level of 82 cents.

Also, for the current quarter, Centennial Resource has seen five downward estimate revisions, dragging the consensus estimate down to 19 cents a share from 26 cents over the past 60 days.   

The stock also has seen some pretty dismal trading lately, as the share price has dropped 13.2% in the past month.

CENTENNIAL RES Price and Consensus

CENTENNIAL RES Price and Consensus | CENTENNIAL RES 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 Oil and Gas – Exploration and Production – United States industry, you may instead consider a better-ranked stock - Bonanza Creek Energy, Inc. BCEI. 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.

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CENTENNIAL RES (CDEV) : Free Stock Analysis Report
 
Bonanza Creek Energy, Inc. (BCEI) : Free Stock Analysis Report
 
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Zacks Investment Research