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What Makes Pep Boys (PBY) 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 Pep Boys - Manny, Moe & Jack (PBY), 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 PBY.

A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen 1 estimate moving down in the past 30 days, compared to no upward revision. This trend has caused the consensus estimate to trend lower, going from 17 cents a share a month ago to its current level of 7 cents.

Also, for the current quarter, Pep Boys has seen 1 downward estimate revision versus no revision in the opposite direction, dragging the consensus estimate down to 3 cents a share from 6 cents over the past 30 days.

The stock also has seen some pretty dismal trading lately, as the share price has dropped 14.4% 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-Auto Parts industry, you may instead consider O'Reilly Automotive Inc. (ORLY). Further, moving on to the broader Construction sector, America's Car-Mart Inc. (CRMT) and Rush Enterprises, Inc. (RUSHA) are some of the better-ranked stocks. While America's Car-Mart holds a Zacks Rank #1 (Strong Buy), O'Reilly Automotive and Rush Enterprises carry a Zacks Rank #2 (Buy). With favorable Zacks Ranks, these stocks may be better selections at this time.

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PEP BOYS (PBY): Free Stock Analysis Report

O'REILLY AUTOMOTIVE INC (ORLY): Free Stock Analysis Report

AMERICAS CAR MART INC (CRMT): Free Stock Analysis Report

RUSH ENTERPRISES INC CL A (RUSHA): Free Stock Analysis Report


Zacks Investment Research