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Why Mitek System (MITK) Could Be Positioned for a Slump

Zacks Equity Research
Updated

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 Mitek Systems, Inc. MITK, 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 MITK.

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 with no upward revisions. This trend has caused the consensus estimate to trend lower, going from 19 cents a share a month ago to its current level of 14 cents.

Also, for the current quarter, Mitek Systems has seen 2 downward estimate revisions versus no revisions in the opposite direction, dragging the consensus estimate down to a loss of 2 cents a share from earnings estimate of 3 cents over the past 30 days.   

The stock also has seen some pretty dismal trading lately, as the share price has dropped 13.9% in the past month.

MITEK SYSTEMS Price and Consensus
 

MITEK SYSTEMS Price and Consensus | MITEK SYSTEMS Quote

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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 Computer & Technology sector, you may instead consider a better-ranked stock - TiVo Corporation TIVO. 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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TIVO CORP (TIVO): Free Stock Analysis Report
 
MITEK SYSTEMS (MITK): Free Stock Analysis Report
 
To read this article on Zacks.com click here.